Brits jump ship when service gets poor – not when the rates get good

People are notorious for seldomly switching their current accounts. Research from moneysupermarket.com shows nearly two in five people (39 per cent) have never changed their current account despite providers hitting the market regularly with appealing credit balance and overdraft interest rates – there are currently 14 offering rates above three per cent, of which six offer rates over five per cent. In fact only eight per cent of current account holders switched in the last year, testament that this lure is largely unsuccessful.

The results show just over a quarter (29 per cent) switched as a result of poor service or a bad experience, compared with a lowly 13 per cent who switched to get a better rate on their credit balance.

Interestingly, the research shows that when Brits are happy they are a loyal bunch, with over a third of non-switchers (36 per cent) sticking with their account provider because it has been good to them over the years. Equally just over a quarter (27 per cent) simply can’t be bothered to change, or think switching is too much hassle.

Stuart Glendinning, managing director at moneysupermarket.com, said: “Inertia creeps in when it comes to switching current accounts, but it really beggars belief when there are so many great deals on the market. Many people cannot be bothered, or fear the transition will not be smooth, direct debits left unpaid and penalties incurred, yet I expect any decent provider should be very humble if the switch was anything less than straightforward.

“A number of current account holders are very loyal to their banks, but in many cases it seems to be more of a one-way relationship. Many people remain with the bank they have had since leaving college or university and will often find their money is languishing in accounts paying a dismal 0.1 per cent on credit balances. So whilst hassle-free banking and good customer service has kept people sweet, they are being insulted with paltry interest rates.

“The high street banks are typically the worst culprits albeit Lloyds is an honourable exception offering four per cent up to £5,000 on its Classic current account which is available to all existing customers as well as new, provided they meet the account criteria. Alliance & Leicester continue to dominate the best buy tables with arguably the best current account on the market today with 6.1 per cent on credit balances up to £2,500 and 0 per cent overdraft rate for 12 months followed by the lowest authorised and unauthorised interest rate at 5.7 per cent; although Nationwide Building Society offers an attractive account delivering 4.25 per cent on balances up to £3,000 with a low overdraft rate of 7.75 per cent.”

Other findings from the research show:

Nearly a quarter (23 per cent) in the North East switched to seek a better interest rate on their current account, compared with only eight per cent in East Anglia (13 per cent GB average)

The highest number of switchers are in the South West, with nearly one in five (18 per cent) changing accounts in the last year (eight per cent GB average)

Londoners are one of the laziest when it comes to switching with over a third (35 per cent) who can’t be bothered or think it’s too much hassle (27 per cent GB average)

Stuart continued:“My advice if you either have a constant credit balance, or are constantly in your overdraft, is to shop around now for a provider which will reward you with a competitive rate. It is likely a lot of people will have time to build up another good relationship with their current account provider and still get more for their money.”