Which Bank Should You Switch Allegiance To?

By Chris Furness on at

If ever there was a good time to start banking with somebody else, it's now. New government-enforced rules mean that banks have to transfer your banking within seven days, including handling the transfer of your current accounts, direct debits and standing orders. Any inconvenience will also be compensated for, so there really is no excuse if you're dissatisfied with the people currently in charge of looking after your hard-earned money.

With 33 banks to choose from who entered the scheme -- all of which are offering different incentives -- the choice isn't easy, so I'm going to outline some of the most interesting deals available right now from providers with some of the highest customer satisfaction rates. There's really no 'one size fits all solution' and there are certainly pros and cons for each bank, but hopefully you should spot one that ticks enough of the boxes for it to be worth doing.

 

First Direct

Of all the providers on this list, First Direct is the most interesting. They work in a similar way to GiffGaff in that there are no First Direct branches you can walk into, relying instead on 24/7 internet and phone banking. I know the lack of a physical building to go to might immediately start ringing alarm bells but there are a couple of aspects to keep in mind. First is their amazing customer service, which has won several awards over the years. Consumer watchdog Which? recently posted an 84 per cent customer satisfaction rating -- the highest of any bank.

I also had concerns about the need to withdraw large sums of cash or depositing a cheque, but after speaking to a lovely Yorkshire lady named Jenny I was swiftly assured. First Direct is a subsidiary of HSBC, so if large amounts needed to be withdrawn then you just call up and they'll authorise a local branch to release the money to you. Cheques can be paid in via post or a local post office.

I've saved the best part until last: they'll give you £100 to switch over to First Direct. Yes I know, I've seen the advert with the platypus as well and realise he says you get £125, but they must have changed it within the last few days. And who are you going to believe, me or a platypus? Don't answer that. Bear in mind that there are a few hoops you need to jump through (detailed here) but if you qualify then it's an excellent incentive. They'll also give you £100 if you aren't satisfied after six months and will even help you move your account elsewhere. Neat, huh?

You'll also get a £250 interest-free overdraft, with a rate of 15.9 per cent interest rate on anything over that. Now, it's possible that if you're always in credit then it may be worth switching to an interest-paying current account, but considering you get a £100 lump sum you'll have to weigh up the benefits of long term vs instant returns yourself. All in all, though, I believe that First Direct are offering a fantastic all-round package on paper and are well worth considering, especially if all you're after from a bank is great customer service.

 

Nationwide

If you find yourself travelling regularly in Europe, then FlexAccount may be the right service for you as you get free, multi-trip European travel insurance. This travel cover has been rated five stars for eight years running by Defaqto, which I'm assuming is good because they make a point of it on their website. They aren't too shabby in the customer service satisfaction department either, with a 77 per cent rating according to our trusty friends over at Which? again. You'll also get 'Flexclusives' which not only provoke I-see-what-you-did-there wry smiles, but also offer rates and deals on services such as credit cards, mortgages and loans. Have a gander here to see if there are incentives that may be relevant to you.

If those offers seem a bit too niche for what you're looking for, then don't worry: Nationwide is offering a second tempting current account. Known as the FlexDirect Account, this one is offering one of the highest available interest rates for a current account. This includes 5 per cent in-credit interest on balances up to £2,500 for the first year (which essentially matches what the First Direct platypus was offering, just not upfront). You'll also have access to a 0 per cent overdraft for the first 12 months and reduced fees for an arranged overdraft after that.

With two excellent accounts, Nationwide should offer something that would be of interest to anyone looking to switch, but I'll leave it to you to decide whether either are better than what First Direct is offering. You can find all the details for the FlexDirect Account here.

 

Halifax

While its overdraft system might not be as favourable as those listed above, as their interest free planned option only lasts for six months, Halifax is offering one of the best free money deals around at the moment. Providing you switch by the end of the year and switch at least two direct debits, not only will they give you £100 but you'll also get £5 a month as a reward, which I suppose justifies the Rewards Account name.

On top of this, you'll get up to 15 per cent cash back from participating retailers, including Argos, Play.com, Morrisons and (my personal favourite) Domino's Pizza, with their Cashback Extra scheme. There are no codes or vouchers; you simply use your card to shop online after clicking the personalised offer and the cash back will be credited the following month. There's also no limit to the amount of cash back you can receive, but you are limited to how many times you can take advantage of each offer.

So not only are you getting a potential £160 in your first year, but you'll also get money back for products you were potentially going to buy anyway. It's a strong proposition for anyone who thinks they will always stay in credit.

 

One to watch: Virgin Money

Virgin is going to start offering a current account in the very near future and a phone call to them suggested that they are aiming to launch it before year's end. I'm speculating here, but I suspect they may be quite aggressive with their offers in order to entice people away from their current providers. This could result in deals for its television or broadband services but could also include offers on Virgin trains and air travel. If any of this sounds like it would be of interest then it may be worth holding off for now and registering your interest, which you can do here.

This article was written with the intention of showing you that there are great offers currently available to you, and was not meant as a comprehensive guide to banking. There are other quality current accounts not mentioned here from the likes of NatWest and Santander, so I do urge you to shop around if none of the above tick the important boxes for you personally. For example, all of the accounts in this article (other than Virgin Money) require you to deposit between £750 to £1,000 a month in order to activate the rewards or to get the account for free. If that's an issue for you then it's definitely worth looking for one that doesn't require this investment.

Finally, it's important to note that there is no real reward for loyalty when it comes to banking, so if someone is offering better interest rates or has amazing customer satisfaction then there really is no reason to stick with your current provider.

If you have had a great (or not so great) experience with a particular bank or building society then please let us know in the comments below.

Image Credit: Bank vault via Shutterstock

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