11th April 2014
Following the figures released today from the Payments Council, reporting a 14% increase in the number of people who have switched current accounts in the past six months, MoneySuperMarket has analysed the best deals on the market.
With more than 609,300 switches taking place since the launch of the Current Account Switching Service last September, compared to 532,500 in the same period last year, the comparison website has researched how banks have incentivised customers to switch.
The research found both Nationwide and TSB are offering current accounts with in-credit interest rates of 5% – over three times more than the top easy access savings rate which stands at 1.50% AER.
Nationwide currently offers 5.00% AER on balances up to £2,500 for the first 12 months, while the recently launched TSB Classic Plus Account also offers 5.00% AER on balances up to £2,000 with no monthly fee.
Since August 2013, both The Co-operative Bank and Smile have introduced a £100 cashback gift to those who switch to their current accounts, as well as donating £25 to a chosen charity.
Consumers who move to First Direct’s 1st Account or Halifax’s Reward Current Account would also benefit from an extra £100, as well as the fact they can now switch in just seven days.
Kevin Mountford, head of banking at MoneySuperMarket says: “Six months on from the implementation of the Seven Day Switching Service the numbers are certainly heading in the right direction, with providers stepping up their offers and increasing competition in the market. As a result, there have been a number of tempting new product releases in the past few months which, combined with the fact that it really does take just one week to change accounts, should encourage savers and current account holders to start thinking about switching and taking advantage of what is available on the market.
“Easy access accounts paying 1.50% interest don’t look so attractive compared to the leading current account interest rates of 5.00%. Therefore, current accounts should also not be ignored when it comes to shopping around for the best rate – especially as providers are also offering cash incentives to those who switch.”
However, Mountford adds that people should be aware of high overdraft charges on some of these accounts as those who regularly dip into their overdraft will find a better deal elsewhere. He says: “In order to benefit from the higher rates, customers will need to meet the minimum funding requirements or other terms and conditions, so it is important to check these before you switch.
“Switching is now quick and easy which, mixed with the fact that providers are ramping up their offerings, can only benefit savers. Customers who do not weigh up all these factors and move to the best deal suited to their needs only have themselves to blame when they miss out.”