Downside of Account Switching Chain?

Ryan6

Hi, I'm considering to initiate an account switching chain to get the switching incentives from the banks that offer them.

Example:
I open a current account in Bank A, leave a little cash inside, then switch it to Halifax (get £100), then switch from Halifax to Co-Op (get £150) -> M&S (£100 giftcard) -> First Direct (get £100) -> Nationwide by referral (get £100).

Is there any downsides of doing this? If I were to do this whole process over a short period of time like, say, 6 mths, would it affect my credit rating or is there a possibility the banks at the later part of the chain would refuse my switch? Is this actually legal? I've read the terms of a few bank accounts and none say I can't close their account in a short time and one said I can close my account at any time for any reason but I can't be too sure.

Thanks in advance for any answers!

Westie983

The one thing I can think of is opening of so many accounts in close succession may end up in declines, especially if each one is a newly opened account. It is possible but doubt you will get to the end of the chain.

It will affect your credit file but only for a short time, I wouldnt suggest doing this if you are looking to apply for any forms of credit, like a mortgage as the searches on your file will go against you. Also your credit file wont distinguish between if the banks have closed the account down so soon after opening or you, as part of a switch or just a tidy up of accounts so this could go against you.

Switches can be refused if using a overdraft or pending fees as these will have to be paid before switching.

As for legality, there is nothing written down to say you cant do this, but again I doubt you will get to the end of the chain, some of the banks you have mentioned are deamed picky when choosing who they want to offer bank accounts too, namely FD and M&S. Some banks in your list also require you to have you card and PAN number before switching namely Coop and M&S.

Good luck though if you decide to go ahead.

Ryan6

Ah, I anticipated I might not reach the end of the chain too...

Well I'm a foreigner who'd only be in the UK for less than a year from now so I won't need to apply for credits/mortgage in the long term.

I applied for 2 credit cards in the last 3 months (1 for stoozing,1 for spending in the EU) and unsuprisingly both got declined and I apparently did not know the impact of that to my credit ratings.
Overdrafts would not be a problem too as I have not and will not need to overdraft.

So I guess I could just to take a leap of faith and try it...
Thanks for the advice!

eskbanker

Ryan6 wrote: »

I applied for 2 credit cards in the last 3 months (1 for stoozing,1 for spending in the EU) and unsuprisingly both got declined

It may not have been a surprise to you but there's nothing in your posts that would indicate this being likely, or have you not been in the UK for long perhaps (in which case your multi-switching plan may founder quite quickly before it gets started)?

Ryan6 wrote: »

I open a current account in Bank A, leave a little cash inside, then switch it to Halifax (get £100), then switch from Halifax to Co-Op (get £150) -> M&S (£100 giftcard) -> First Direct (get £100) -> Nationwide by referral (get £100).

Rather than one long chain, you might consider two or more shorter ones, i.e. opening a second account at bank A and using that to start another chain, rather than always needing to start with new institutions.

TheShape

I've applied and been accepted for 9 current accounts (including FD and M&S) and 2 credit cards since mid June. I've got just one more account opening and switch in mind, a newly opened RBS account switch to HSBC Advance. I feel I'm really pushing my luck now with all the hard credit searches. HSBC might be tough as my income only just meets thiei requirements (or doesn't quite because of pension contributions).

If you're going to aim for some switching incentives maybe try the one that will give you the best incentive first but also check to see of you can also make use of the linked regular savers. No point switching out an account that has benefits.

You can then set-up another donor account to use as a switcher.

Turn down overdrafts if you can and if you won't need them.

Kim_13

All of those accounts have ongoing benefits, from a Monthly Reward to a 5% Regular Saver.

I would do a number of chains over a few months or more, starting with the one you want most, just in case you get declined at any stage. That said, one decline doesn't always mean a decline at all of the others due to too many searches. (FD, M&S and the Co-Op to a lesser extent are picky as to who they accept as a customer, going from posts on here.)

Bear in mind that some of the incentives will require a number of Direct Debits to be in place at the time of the switch.

badger09

TheShape wrote: »

I've applied and been accepted for 9 current accounts (including FD and M&S) and 2 credit cards since mid June. I've got just one more account opening and switch in mind, a newly opened RBS account switch to HSBC Advance. I feel I'm really pushing my luck now with all the hard credit searches. HSBC might be tough as my income only just meets thiei requirements (or doesn't quite because of pension contributions).

If you're going to aim for some switching incentives maybe try the one that will give you the best incentive first but also check to see of you can also make use of the linked regular savers. No point switching out an account that has benefits.

You can then set-up another donor account to use as a switcher.

Turn down overdrafts if you can and if you won't need them.

Kim_13 wrote: »

All of those accounts have ongoing benefits, from a Monthly Reward to a 5% Regular Saver.

I would do a number of chains over a few months or more, starting with the one you want most, just in case you get declined at any stage. That said, one decline doesn't always mean a decline at all of the others due to too many searches. (FD, M&S and the Co-Op to a lesser extent are picky as to who they accept as a customer, going from posts on here.)

Bear in mind that some of the incentives will require a number of Direct Debits to be in place at the time of the switch.

Generally agree with previous comments, but as OP is likely to be in UK for less than a year, Regular savers are of very limited use.

Those from M&S and FD do not allow early closure (well they do, but the RS rate would be lost). By the time he/she gets to Nationwide it would be too late anyway:cool:

Ryan6

eskbanker wrote: »

have you not been in the UK for long perhaps (in which case your multi-switching plan may founder quite quickly before it gets started)?
Rather than one long chain, you might consider two or more shorter ones, i.e. opening a second account at bank A and using that to start another chain, rather than always needing to start with new institutions.

I've just been in the UK from June...
Umm may I ask how is starting 2 shorter chains be better than 1 long chain? I'm asking this cuz I have some constraints in spending time to open bank accs, thanks!

Ryan6

TheShape wrote: »

I've applied and been accepted for 9 current accounts (including FD and M&S)...

...but also check to see of you can also make use of the linked regular savers.

You can then set-up another donor account to use as a switcher.

May I ask if all 9 of your current accounts are opened by switching to them using "donor accounts" you set up just for switching? And are these "donor accounts" from the same bank?

For the regular savers the interests are usually paid on full term (usually a year) and sadly after a year I would no longer be in the UK so that's not an option. I do hold one that matures before I leave, and also I dun have that much money to need >1 regular saver account, :rotfl:

Ryan6

My current plan is:

Open account in Bank A -> First Direct -> Close First Direct after 6 months to get (leaving bonus)
Open account in Bank B -> Halifax
(Both switch to be applied at the same time)

From Halifax:
Try to set up 2 Direct Debits (as I dun have any regular payments so I need to look up for charity sites that allows donation by DD, then -> Co-op -> Nationwide (the switch to Nationwide should be ideally towards the end of Jan or latest in Feb as the incentive will be credited on following 20th and the incentive can be revoked if account is closed within 3 mths of incentive crediting, and I have to close the account latest in June.

Based on all suggestion given what I could do to increase the odds are to:
Open new accounts in banks I tried before and use these to switch to Co-op, M&S, Nationwide in separate chains. (Might just skip M&S cuz of time constraint and it's a giftcard instead of cash)

Any more suggestions? Thanks for all the patience and advices!

jonesMUFCforever

Ryan6 wrote: »

My current plan is:

Open account in Bank A -> First Direct -> Close First Direct after 6 months to get (leaving bonus)
Open account in Bank B -> Halifax
(Both switch to be applied at the same time)

From Halifax:
Try to set up 2 Direct Debits (as I dun have any regular payments so I need to look up for charity sites that allows donation by DD, then -> Co-op -> Nationwide (the switch to Nationwide should be ideally towards the end of Jan or latest in Feb as the incentive will be credited on following 20th and the incentive can be revoked if account is closed within 3 mths of incentive crediting, and I have to close the account latest in June.

Based on all suggestion given what I could do to increase the odds are to:
Open new accounts in banks I tried before and use these to switch to Co-op, M&S, Nationwide in separate chains. (Might just skip M&S cuz of time constraint and it's a giftcard instead of cash)

Any more suggestions? Thanks for all the patience and advices!

The plan will only work if you are accepted for proper full accounts not basic ones - which as a new resident some will give you.
You can still use the switching service but you might get stuck quite early on un the chain.