High-credit interest is the biggest lure for new bank account customers
With the second anniversary since the launch of the Current Account Switch Service on 16 September, MoneySuperMarket reveals the main current account features that incentivise customers to move to a new bank.
Based on analysis of what it is customers look for when choosing a new account, the UK’s number one comparison site found two-fifths of consumers (41 per cent) are looking for high in-credit interest. This is a significant rise from last year, when the same analysis revealed a quarter (27 per cent) of site visitors were keen on interest rates when looking to switch their account.
Further analysis shows consumers could earn over three times more interest with one of the top paying current accounts compared with the top easy access savings account. Both Nationwide and TSB offer current accounts with in-credit interest rates of five per cent, whereas the leading easy access account from Kent Reliance Building Society pays just 1.65 per cent AER. Nationwide’s FlexDirect account currently offers five per cent AER on balances up to £2,500, while TSB Classic Plus Account also offers the same rate on balances up to £2,000. Alternatively, Santander’s 123 account pays 3.00 per cent AER on balances between £3,000 and £20,000 making it a good option for anyone with a larger savings pot.
More big reasons to switch
One in five (20 per cent) want an account which offers a cash bonus upfront for switching, and another 20 per cent are enticed by the benefits and rewards they could receive. Fourteen per cent are pulled towards a current account for the overdraft facility on offer, and five per cent consider switching due to customer service.
Those who believe cashback is king could earn as much as £150 by switching their account to First Direct or Clydesdale and Yorkshire Bank. Meanwhile consumers who move to Halifax’s Reward Current Account would receive £125 cashback when using its dedicated switching service and benefit from up to 15 per cent cashback when using their debit card with selected retailers.
Kevin Mountford, head of banking at MoneySuperMarket, said: “The importance of high in-credit interest rates has soared, which isn’t a surprise as the interest available on easy access savings accounts remains so low. The introduction of the Current Account Switch Service has definitely driven banks to be more innovative and keen to offer attractive incentives resulting in a market rife with competition. The service has also motivated consumers to seek out accounts that suit their needs and boosted peoples’ confidence to move to a new bank given the ease they can do this now the service is in place.
“If you are a saver looking for better rates, then you should maximise your interest whether in a traditional savings account, ISA or current account. Mixing and matching between top paying accounts will ensure your money works hard for you. However, be aware of any terms and conditions or stipulations on the accounts that could affect the rate of return you get. Many of the higher in-credit rate current accounts require customers to meet a minimum funding amount, while some market leading savings deals have restrictions, so it is important know what those may be before you make the switch.”
Michael Chambers, Chief Executive of Bacs, the organisation behind the Current Account Switch Service, added: “The Current Account Switch Service was launched to make switching accounts simple and stress-free for consumers. More than two million people have successfully moved between banking providers using the service since it launched in September 2013. This year alone, over half a million switches have already taken place and we have recorded over a quarter of a million (262,765) switches between April and June.
“Millions of people visit MoneySuperMarket each year to search for the most competitive and beneficial deals available. Consumers are increasingly aware of the options out there and that a current account with one provider is no longer something that necessarily has to be for life. The Current Account Switch Service has helped benefit consumers whether they have chosen to switch or not – contributing to greater innovation from providers and more market competition. This is great news for consumers and was fundamental to the creation of the service.”