Current account customers losing money by not switching
Well over 90 per cent of current account holders are potentially throwing money away by not switching providers, according to a new report into consumers' switching habits conducted by Datamonitor on behalf of Santander.
The study reveals that only seven per cent of all current account holders switched provider during the last 12 months. This is significantly lower than switching levels for other products such as savings accounts, home insurance, motor insurance and pay monthly mobile phone contracts, showing that people are potentially missing out on benefits from current accounts more than any other product.
The ‘Switching in the UK' report, which examines consumer habits across a range of products, reveals that four in ten car insurance customers (39 per cent) have switched provider in the past year, closely followed by one in three home insurance holders (33 per cent). Some 17 per cent of pay monthly mobile contract customers have switched provider in that time period, as have 15 per cent of all savings account holders.
By not switching their current account people could be missing out on £2.2 billion in interest according to research for Santander Current accounts which, earlier this year, found that nearly three-quarters of people (74 per cent) with current accounts don't intend to switch within the coming 12 months.
Rod Logan of Datamonitor said: "Consumers are much more likely to switch products like car and home insurance than current accounts, suggesting current account holders are unaware of the great deals available and so hold accounts with basic functionality and no extra benefits."
The savvy younger generations are most likely to switch current account providers, with 11 per cent of 18-34 year-old account holders having switched in the past 12 months, compared to just 6 per cent of 35-54 year-olds and 5 per cent of those aged 55 or over.
Those who do switch providers seem to do so less frequently with their current account than other products. Of all those people who have previously switched their current account, only 20 per cent have done so in the past 12 months, compared with 36 per cent of monthly mobile phone contract holders.
People who have ever switched their current account are most likely to have done so just once in their lifetime. For those who do switch current accounts, the preferred method is to do so directly at one of the provider's outlets, with one in two current account switchers (50 per cent) using this channel.
Gillian Almond, Head of Santander Current Accounts commented: "Traditionally, people have kept their current accounts for a long time and many providers have become complacent because of this, offering poor rates and little or no rewards. However, having a better current account can make a significant financial difference to consumers so it's important for them to understand that it's worth shopping around.
"We understand that some people are putting off switching their current account to a better deal, because of the perceived ‘hassle factor', so we have set up a dedicated switching service to help customers with the process of moving current accounts. And with 300 more Santander branches in the UK there has never been a better time to take advantage of our £100 offer and move to a better current account."
By switching current accounts, people can find much better rates as well as rewards. If you switch to Santander today you can get 5 per cent AER (fixed) interest for 12 months on balances up to £2,500 as well as the £100 cashback.