Switching current accounts if you’ve only ever had one current account

MargeryKempe

Hi,  l have never done the current account switching thing to get the offers before. I have had the same HSBC current account since 1993 (it’s just a basic bank account). When I’ve applied for credit they ask me how long I have had my current account, so if I switch accounts I will only have had it for a few weeks or months. Is this OK? Does it affect credit rating?

Do people not switch all their income/direct debits over and leave some of them on the original current account?

I remember in 2007 my Dad tried to get me to change my current account to RBS as he doesn’t like HSBC, but I never did it as it all started to get complex, but I think he or someone was suggesting that I still get my salary into my HSBC account and then transfer it into the new current account or something.

I am getting fed up with HSBC as they charge me a large amount for me overdraft, especially with the interest rate increases that have just happened. (I only have a £500 overdraft).

what do people suggest. Thanks!

Cathy

MikeJXE

Keep your current account as it is and either open another account with HSBC or an account at another bank then switch that 

Band7

If you are thinking of changing bank for a cheaper overdraft rate, you might end up disappointed as they all charge more or less the same, extortionate, rates for overdrafts.

Your best bet would be to eliminate your overdraft altogether. Some tips here: https://www.moneysavingexpert.com/banking/cut-overdraft-costs/

You can make quite a bit of money from account switching without ever switching your main account. It will take a little while to get started because you'll first have to set up one or two donor / burner accounts, and you might need to find some small new DDs. Nothing too onerous, and there is a lot of information on this forum on how to go about it.  Try it with an easy switch first, one that doesn't require DDs, for example.

There is also plenty of discussion on this forum about impact of your credit file. In a nutshell, unless you expect to apply for a very large credit (mortgage, big loan) in the next 6-12 months, you don't need to worry about it.

Jami74

MargeryKempe said:

what do people suggest. Thanks!

Open a second current account with HSBC. Once it is properly opened and set up, switch it to another account for a switch incentive. (If you absolutely love your new account and want to use it as your main account, then switch your original longstanding HSBC one into it. If you do a full switch your wages and direct debits will carry across). Then, once your new switched into account is all set up, switch it again for another switch incentive. Be aware though that most of banks will credit check you for a new bank account which will flag up if you make an application for credit. Use the switch incentive money to get yourself out of your overdraft.

Katiehound

I would also suggest opening another account with HSBC so that you can use it for switching deals in the future.
 You have a very long term relationship with your current account and I would keep that, and I would keep that in the future too even if it only ticks over with a few pounds in it.. yes, use any switch deals to pay off the overdraft: it is costing you money.

I don't think when you open a new account/ start a switch that it asks how long you have had that account. It certainly asks how long you have lived at the current address and things like that. I think you are more likely to be accepted if you don't ask for an overdraft...... but then I never have one

You can use your new donor account to collect various switches in the future. If you find you like the new account then keep that, open a new account with that bank and so on.....

In this day and age it is advisable to have at least 2 accounts in different banking groups because IT problems are not unknown!

MargeryKempe

Apologies if someone's covered this but I kind of need step by step instructions of how to set up a new current accoutn that is suitable for switching via one of the offers. I assume I can't switch from an account that doesn't have my salary or anythng going into it. How do I do that?  I'm also happy to follow instructions of how to reduce or remove my overdraft via other methods.

Thanks so much all,

Cathy

MargeryKempe

Also am a bit concerned about applying for new account right now as my credit rating recently took a hit from applying for )% credit cards too often. I didn't get refused an application but I did apply a couple of times in the last few months. Can people suggest lengths of time between applying for accounts or what credit scorre is Ok when applying. Thanks!

Zanderman

MargeryKempe said:

Apologies if someone's covered this but I kind of need step by step instructions of how to set up a new current accoutn that is suitable for switching via one of the offers. I assume I can't switch from an account that doesn't have my salary or anythng going into it. How do I do that?  I'm also happy to follow instructions of how to reduce or remove my overdraft via other methods.

Thanks so much all,

Cathy

You don't need anything going into an account for switching, any current account will do, an unused one with just a fiver (or less!) would be fine. You can open one like that easily.  And then switch it elsewhere. Not sure where the overdraft issue comes in as if you've opened a new account it won't be overdrawn (and it's best to say you don't want that facility when opening an account)

Robin9

The general advice is that you should always have more than one current account (and credit card)  just in case  -  banks can have IT issues and your account can get blocked.

AmityNeon

I wouldn't open a second account with HSBC for switching; they don't make it (as) easy to open a second current account as you have to apply in branch. (Also, opening an HSBC account now would exclude you from taking advantage of First Direct's switch offer.) I'd recommend Metro Bank or Starling if you wish to avoid another hard search, but your credit score is irrelevant as lenders cannot see it and only consider your current circumstances and credit history.

You can indeed switch a new account that has no history of incoming or outgoing payments. Never make assumptions about what can or cannot be switched; what's important are the terms of the offer. The top switch offers currently available do not require any direct debits.

• First Direct: £175 (plus £250 of interest-free overdraft subject to approval)
• NatWest/RBS: £200
• Lloyds Bank: £200 (this requires opening a fee-based account but it can be downgraded to minimise costs)

All three also offer the highest interest rates on Regular Savings Accounts if that's something you're considering in the future.

Metro Bank and Starling accounts can be opened very quickly. You will still need to wait for the corresponding debit card to arrive in the post before you can apply for a switch, as switch applications (which are usually integrated within the current account application) will ask whether the account being switched has a debit card, and if so, you must provide the debit card number.

Bridlington1

I would recommend starting with Lloyds for the first switch. They give you a 3 month 0% overdraft when you switch an account to them as well as the £200 so would certainly cut your fees a bit. Plus they only do a hard search on the first current account you open with them, each additional account you open has no search so you could open a second Lloyds account to switch elsewhere if you wanted to.