MARTIN Lewis’ Money Saving Experts have issued a warning over switching your bank accounts.
The financial guru’s site has urged customers to be cautious as it can look “odd”.
Switching your bank is a standard practice but it can risk affecting your credit score in certain circumstances.
Lewis’ MSE warns that if you are looking to buy a house and sign off a mortgage, it is best to hold off changing banks.
Stick to your current provider when you have an important credit application coming up.
MSE explains that swapping your banks regularly could impact your creditworthiness.
It says: “Generally, one extra search on your credit file shouldn’t make much difference (though many in a short time can).
“Yet there are times when you should hold off, for example, if you’re soon to apply for a mortgage.”
The experts added: “Switching bank regularly can affect your ability to get credit in future, as the applications will show on your file, and could indicate a lack of stability.
“Done sensibly it’s not usually a big deal, yet multiple applications in a short time can look odd.
“So if you’ve an important need for credit (such as a new mortgage), HOLD OFF for six months beforehand.”
Many opt out to create a second burner account just to earn switch freebies every time they hop from one bank to another.
Switching bank accounts has long been an easy way to pocket free cash.
But make sure to keep an eye how it is affecting your credit score in case multiple applications are dragging down your creditworthiness.
MSE wrote: “Most serial switchers make their cash over years, rather than weeks or months, so see it as a marathon rather than a sprint.”
Also remember when you switch bank you should also take into account other factors, like customer service if it’s important to you, or the availability of an overdraft if you need it.
If you do decide to switch, the process is relatively easy thanks to the Current Account Switch Service (CASS).
How do I switch bank accounts?
SWITCHING bank accounts is a simple process and can usually be done through the Current Account Switch Service (CASS).
Dozens of high street banks and building societies are signed up – there’s a full list on CASS’ website.
Under the switching service, swapping banks should take seven working days.
You don’t have to remember to move direct debits across when moving, as this is done for you.
All you have to do is apply for the new account you want, and the new bank will tell your existing one you’re moving.
There are a few things you can do before switching though, including choosing your switch date and transferring any old bank statements to your new account.
You should get in touch with your existing bank for any old statements.
When switching current accounts, consider what other perks might come with joining a specific bank or building society.
Some banks offer 0% overdrafts up to a certain limit, and others might offer better rates on savings accounts.
And some banks offer free travel or mobile phone insurance with their current accounts – but these accounts might come with a monthly fee.
Through the CASS, customers can pick their switch date and leave it to the banks to move any active direct debits to their new account.
Currently, four major banks are offering new current account customers free cash worth up to £220.
We’ve listed the best bank accounts to switch to now to get up to £220 in free cash, and explain what you need to do to qualify for each.
HSBC
- up to £220 free cash, which includes £10 a month cashback for a year. Plus, you’ll get access to a linked saver paying 5%
The current switching offer with HSBC means new customers can get up to £220 by switching from their current bank to a HSBC UK Advance or Premier account.
The money is paid in separate amounts. You’ll get one lump sum payment of £100 for switching, and then you can earn £10 a month cashback for 12 months.
Certain criteria must be met to get the full £220 and the switching process must be done through CASS.
CASS is a free service that lets you swap your old current account to a new one completely hassle-free.
You just have to contact your new bank to apply for their current account, and if you are accepted they will offer to make the switch for you.
In order to get the first £100 payment, you must meet the following criteria:
- Apply for a HSBC Advance or Premier bank account on or after March 11 and successfully open the account
- Switch an existing account from another bank using the CASS within 30 days of opening the account
- The switch must include at least two direct debits or standing orders
- Within 60 days, deposit at least £1,500 into the account over one or more payments
- Make a minimum of 20 transactions using your HSBC debit card
- Register and log on to mobile banking
- Open an Online Bonus Saver account and deposit at least £50
If new customers complete all the above steps, they will receive £100 into their current account within 30 days.
To get the further £120, they must continue to complete a number of the above steps each month for a further 12 months.
Customers must continue to log onto mobile banking, pay in £1,500, make a minimum of 20 transactions and keep their direct debits active each month, with the addition of making a monthly deposit of £50 in their online bonus saver account.
For each month they meet this criteria, £10 will be paid into their account up to a maximum of £120 – or 12 monthly payments – by the 20th of the following month.
Do bear in mind that this extra cash depends on meeting the monthly criteria, so if one month is missed, you will miss out on that month’s £10 bonus payment.
NatWest and Royal Bank of Scotland
- £200 in free cash and up to £36 a year cashback. Plus, you’ll get access to a linked saver paying 6.17%
NatWest and the Royal Bank of Scotland (RBS) are offering newbies £200 to switch their current accounts to an Everyday, Reward or Premier account using the CASS.
To get the cash, you’ll have to deposit £1,250 into your new current account and log in to the mobile banking app within 60 days of switching.
Once you’ve done this, the money will be paid into your account within seven days.
You won’t be able to switch if you have received a switching incentive from the NatWest Group, which RBS is part of, since January 1, 2020.
Customers switching to NatWest or RBS’ Reward bank account can also earn up to £5 cashback when using their card – but they’ll have to pay a £2 monthly fee.
That means they could earn £36 cashback over the year in total.
The Everyday current account from both banks doesn’t offer cashback but is fee-free.
Meanwhile, there are three Premier accounts to choose from: Premier Select, Premier Reward and Premier Reward Black.
There’s no monthly fee for the Premier Select account, but there is a £2 and a £31 monthly fee for the Premier Reward and Premier Reward Black accounts, respectively.
Lloyds Bank
- £175 in free cash and a 12 month Disney+ subscription. Plus, you’ll get access to a linked saver paying 6.25%
Lloyds Bank is giving a £175 cash bonus to anyone who switches to one of three current accounts from a different bank.
Lloyds’ offer is only available to customers who switch to a Club Lloyds, Club Lloyds Silver or Club Lloyds Platinum current account.
Customers must switch from any current account to Lloyds by Thursday March 28 to avoid missing out.
They’ll then need to move two direct debits to qualify for the cash bonus, which will be paid within ten working days of the switch starting.
Customers can also choose one of the following rewards:
- Disney+ free for a year (a saving of £79.90)
- Six cinema tickets
- Coffee Club and Gourmet Society membership
- Magazine subscription
However, there is a catch as the Club Lloyds Bank Account comes with a monthly fee of £3 unless you pay in at least £2,000 every month.