How to switch banks accounts with an overdraft

bigsize9foot

Hi switching experts!

I would like to start switching bank accounts to earn some cash.

Ive been with First Direct for about 20 years. My account there has a #250 free overdraft so of course I use it.

My understanding is that if I switch my existing account will be closed but I don't have #250 to pay the overdraft off with (well I do but there is no incentive as its 0%)

Can you switch with an overdraft? Also how do I set up a dummy account? First Direct are quite strict and I don't think theyd give me another account without a good reason (don't think switching will cut it!)

Many thanks for any info!

B

YorkshireBoy

I wouldn't give up a 20 year history if it was my only current account, due to the impact on my credit file. So that points you to a dummy account.

My understanding is that if I switch my existing account will be closed but I don't have #250 to pay the overdraft off with (well I do but there is no incentive as its 0%)

If the £250 is sat making 5% AER with Nationwide then you're making £1 a month from it. Offset against this is the fact that FD may be reporting to the CRAs that you're constantly sat in the overdraft. That may be seen (by computer credit scoring) as you not being able to manage month-to-month...and all for a (max) £1/mth benefit to yourself. I've previously stoozed £10K and £7.5K free overdraft facilities, but the size made it worthwhile. I wouldn't, however, do it for £1/mth.

Can you switch with an overdraft?

Yes, if the new bank provides a similar facility. However, with the exception of Nationwide, all will charge (some after a 3-4 month period, others immediately).

Also how do I set up a dummy account?

The same as you set up your FD account all those years ago. Obviously ensure there are the requisite number of DDs or SOs on it for any switches planned.

Flobberchops

Yes, the 7 day account switch supports switching with an overdraft, even when you're in overdraft. However it's up to the new bank whether they'll offer you this, you'd have to qualify for an overdraft using their usual criteria.

Kim_13

In your circumstances of having a long standing account with features (the interest free overdraft) that benefit you, I would open a dummy account and switch that. The dummy account does not have to be a new account with First Direct. You could open the dummy account with a bank not currently offering a switching incentive, Barclays for example.

No application is guaranteed to be successful but it may improve your chances of acceptance if you decline an overdraft when asked during the application. You can have current accounts with as many different providers as you like, so can open more dummy accounts if an account offers a switching incentive and ongoing benefits which make the account worth retaining.