The current cost of living is making people analyse all aspects of their finances. However, one thing people often overlook is whether their own current account is being profitable by either saving or making money.
MoneySavingExpert, founded by Martin Lewis, says in its latest email: “With costs rising and Christmas coming, the thought of festivities may lead to furrowed brows. One bit of relief is that six banks are currently willing to pay you legal bribes to switch to them, including the biggest upfront cash we’ve seen for years.
“So unless your current bank makes you smile, why not ditch, switch and earn?” Verena Hallam, 32, from Lancaster, spoke with MoneySuperMarket to explain how she has saved money by regularly switching her current account.
She said: “Back in 2019 I was looking for a quicker way to build up an emergency fund, as I didn’t really have a lot of disposable income after all my bills were paid. I was frustrated with the slow progress I was making with saving.
“I came across Martin Lewis’s guide on the best bank accounts. The switching bonuses looked quite enticing.
“I decided to give it a try and couldn’t believe how easy it was. For about 10 minutes of work filling in the application and switching request forms, I’d made £100.
“I’ve switched bank accounts several times. I made £900 in the first year of doing it.
“It was a huge help with my savings goal. So far I’ve made £1,025 in total, plus a box of free wine!”
MoneySuperMarket’s personal finance expert, Jo Thornhill delved into best practice for switching accounts to make your money work harder. She said: “Switching current accounts can be a beneficial way to make extra money and access joining bonuses.
“However it is worth noting that switching current accounts too often can affect your credit score. Applying for a new current account will show on your credit rating as many banks will do a ‘hard check’ which shows on your credit report.
“One hard check if you’re opening a new bank account isn’t going to cause too much of an issue. But if you receive multiple hard checks in a short space of time (if you are switching energy suppliers, applying for a loan etc.) then it can be a problem.”
It is a relatively easy and simple process to change current accounts. Jo said: “The switching process is very quick and takes seven working days.
“The earliest your switch can be completed is just over a week from when you sign up with your new bank. You should choose a day when you don’t have any direct debits leaving your old account so no problems occur in the process.
“Also, don’t set up any regular payments from your old account during the seven-day switching period. Otherwise they won’t be carried over.”
Jo has specific advice for those who may be in overdraft. She said: “It is the best protocol to avoid going into your overdraft, but if you have gone into your arranged overdraft you are still able to switch current accounts easily as long as you have a relatively good credit rating.
“It is definitely worth considering speaking to your new provider on your new current accounts overdraft limit to ensure it will accommodate. If however the new provider you are looking to switch to doesn’t offer an overdraft, it may mean you need to keep your old current account open until you can pay it off.”