Downside to current account switching?

TickersPlaysPop

Hi all

I expected on the MSE pages to have a balanced set of advice, but there is no mention of negative sides to switching your main current account?

Are there no disadvantages?

Surely agree over draft size will be smaller until you stay with them for a number of months/years. Also, if you need to apply for a mortgage, how will you provide 6 months worth of bank statements? How about minor wrong doings, such as very small negative balance over limits there will be less inclination to waive the fees?

Peace

JuicyJesus

There aren't really any negatives. I mean, if you might need six months' bank statements to apply for a mortgage, don't switch your account within six months of applying for a mortgage. Those things don't really sneak up on you.


It's not always the case that O/D limits are smaller. I had a £500 limit with First Direct that they only agreed to once extend temporarily (and never ended up using); Halifax offered £1,200 permanently straight out of the gate. Everyone has different criteria.


In general though, they're kind of small edge cases in the scheme of things compared to the fact that you can often get free money and/or a vastly better deal by switching.

d70cw6

administration of setting up new accounts and standing orders i guess.

copperclock

I think a lot of people use a kind of dummy account to switch so overdrafts and such aren't important.

takman

If you go from having an overdraft to not having one that's a benefit in my opinion because anyone who needs an overdraft is poor at managing their finances so it gives them an opportunity to sort them out. Once they sort out their finances there also won't be any "minor wrong doings". But from my experience on here banks seem to refund the fees the first time you make a mistake but not again, so switching to another bank actually gives you another chance!.

In regards to 6 months bank statements well that's not difficult to do you just use bank statements from your current account and your previous account together. But like others have said you should never just have one account so if you keep your main account and just switch your backup accounts then you will have no issues with statements. But if your thinking of applying for a mortgage in the next 6 months you shouldn't really be switching accounts anyways until after it completes.

System

The standing recommendation on here, is to have at least 2 current accounts (with varied providers) incase of IT meltdown or other issues with a bank.

Switch one and keep the other/s (long term) for stability.

TickersPlaysPop

Thanks all... living with a very small agreed overdraft is not comfortable for me, because if you mess up it can be costly.

Also, i have seen at least one of the banks saying that you only get the cash payment if it is your main current account... so having 2 current accountsituation won't always work.

Cheers all

YorkshireBoy

TickersPlaysPop wrote: »

Also, i have seen at least one of the banks saying that you only get the cash payment if it is your main current account...

And their definition (direct quote please) of a "main current account" is?

so having 2 current accountsituation won't always work.

I've bagged every single switching incentive (and some of them many, many, times!) available in the last 5 years (or maybe even more), and it's always worked for me.

takman

TickersPlaysPop wrote: »

Thanks all... living with a very small agreed overdraft is not comfortable for me, because if you mess up it can be costly.

I currently have 18+ accounts and I don't have an overdraft on any of them and I have never in my life been charged a fee for an unagreed overdraft, so if your organise yourself overdrafts are pointless. Plus when you consider banks like Nationwide are paying 5% interest on upto £2500 then if you only want one account you should have that and keep £2500 in there as the minimum balance. So you get paid interest on it and you won't need an overdraft even if your prone to mistakes.

Also, i have seen at least one of the banks saying that you only get the cash payment if it is your main current account... so having 2 current accountsituation won't always work.

Cheers all

Like the poster above says it ALWAYS works if you follow the terms and conditions, nobody has ever been refused the bonus because they have another current account. Plus who has just two!, with Nationwide paying 5%, BOS, TSB and Tesco paying 3% - that's atleast 7 should have already.

Are you saying you only have one current account because if so your missing out on alot of interest on your savings.

Zanderman

TickersPlaysPop wrote: »

Also, i have seen at least one of the banks saying that you only get the cash payment if it is your main current account... so having 2 current accountsituation won't always work.

It will always work if you abide by the T&C.

Don't go by the general description saying it must be your 'main' account. That is undefineable anyway but all the bank means is that they want you to use it as a 'main' account. Their wording is designed to make you think you must operate the account as your main - but it's just promotional wording - it's not the T&C.

They measure that definition of 'main' in the only way they can - which is necessarily clumsy - by defining how much you pay-in monthly and whether there are active direct debits - both, theortetically, signs of active 'main' use.

But the formal definition of this in the T&C is simply an insistance of a particular minimum paid in and/or a particular number of DDs each month. So as long as you fulfill those formal criteria the bank effectively considers it 'main' (by their own rather simplistic definition).

So it is easy to have multiple current accounts meeting the criteria - and an ambition of two is a very low ambition!

And, if you're bothered by the pay-ins and need for DDs there are several useful current accounts that don't need either - Tesco for example offers 3% on £3k in a current acount with no conditions at all. And Tesco allow you to have two of those. Easy. But for switching incentives most have the pay-in and/or DD terms.

moongarden

Any OD arrangement should be based on your ability to pay - as with any loan. I recently switched from Barclays to Nationwide and had a £500 overdraft arrangement originally which Nationwide set up at £1750 - this wasn't what I had asked so they apologised and changed it to £1000 as per my request.