Switching current accounts tends to be viewed as a hassle, mainly because of the need to get all your direct debits and standing orders moved across to the new account. However, in an increasingly competitive retail banking market, the bank you are transferring to should be keen to do most of the work for you. I guess whether they succeed in this is the first real test that you’re going to have as to whether your new bank is efficient and customer orientated.
So, what are the steps in transferring your current account? Well, firstly start by researching which bank and which account you want to switch to. There are lots of accounts to choose from and you need to decide what features you want from the account. Are you just looking for the best rate? Or an account that offers a good overdraft deal? Or an account that offers lots of value added benefits such as preferential rates on savings accounts, etc. This latter category of account is often referred to as a packaged current account but usually has a monthly subscription charge attached to it.
If you’re unsure which bank and which account to opt for, then you could shortlist a few and visit them to speak to their customer advisers. This may also give you a good feel for things such as whether there are big queues in the branch and how friendly and knowledgeable the staff are. Another option is to go to a money comparison site (such as www.fool.co.uk) and check out the accounts that they compare. However, please bear in mind that such sites tend to focus pretty much exclusively on price.
Having selected the bank and the account that you want to transfer to, you then need to submit an application. This can usually either by done in person by visiting a branch, or online. Either way, you will be asked for some fairly standard information (name, contact details, some basic financial information, etc) and your application will then be credit scored. You should then be told whether you can have the account and whether you are eligible for an overdraft and/or debit card. (Note: If you have an overdraft with your existing bank, it’s worth mentioning this to see if they will match it).
The bank will also require you to provide documentation to prove your identity and your address. So, if applying via the branch, it’s a good idea to bring a recent bank statement, a utility bill, and a driving licence or passport. You might want to phone the bank in advance to check what documents they would need. (Note: Statements that you’ve printed from online banking can’t usually be accepted as proof of ID)
Once the bank’s verified you, they should open your new account and advise you of your account number and sort code. (Things like cards and a welcome pack will follow within a few days).
That still leaves you with the task of transferring your direct debits and standing orders across to your new account, arranging for your salary to be paid into the new account, and advising your old bank to close your old account. This should all be looked after be your new bank if they’re any good. They will generally ask you to supply details of your old account, such as which bank it was with, what the sort code is and what the account number is. They will also probably ask you to sign a form that provides them with your consent to contact your old bank to get details of the direct debits, etc.
Your new bank will then write to your old bank and will advise them that you have instructed that the facilities on the old account by transferred across. They will ask for a list of all your direct debits and standing orders to be supplied.
Your old bank should then send these details to your new bank. They will typically then post the list of direct debits and standing orders to you and ask you to confirm that the details are correct. Once you’ve provided this confirmation, your new bank will re-establish the direct debits and standing orders on your new account.
The last task that your new bank will undertake for you is to instruct the old bank to close your old account (assuming that you do want it to be closed). They should not do this until all your direct debits and standing orders have been re-established, so that you don’t end up missing any important payments such as your gas, electricity, or mortgage!
You may be required to contact your employer to get them to redirect your salary.
That’s basically the process explained. Obviously, the more direct debits and standing orders that you have the more likelihood there is of a delay. And you should keep in touch with your new bank to make sure that they are moving things forward for you. However, if you’re stuck with a bank that offers bad service, then switching may prove a smart move. It can also be an important part of ensuring that you are getting maximum value from your finances.