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Current Accounts – Does it pay to switch?

Much has been made in the media about the negative implications of the recession. However, one of the more positive aspects of the financial crisis has been that people have become engaged with their money again. They are smarter with the financial decisions that they make, and have higher expectations from their banks and financial providers.


For a long time, big banks have ruled the roost over consumers, offering few benefits, poor rates of return and little in terms of added value. Visits to the bank included a hard sell for added services when carrying out the simplest of transactions. However, as they attempt to regain consumer trust following mis-selling scandals, they have improved their customer service standards as they compete with other players on the high street. Advertising is now largely based around how they can add to people’s lives and the added value benefits their accounts and services can provide.
The Payment Council have stated that between the period of 1st Oct 2013 and 31st August 2014, there was an increase in British customers switching between current accounts. This increase totals approximately 19% more than the previous year and attests to the theory that Britons are becoming financially empowered. This can be attributed to the new faster switching rules that came into play in September of 2013. Under these new rules, developed between the Government and the Financial Services industry, the onus is on the bank not the customer to switch Direct Debits and standing orders – the main source of stress when changing accounts. The switch must also be completed by the bank in just seven days for minimum disruption to the consumer’s finances. Under the £750 million investment, consumers will be compensated for any banking error that causes disruption to their accounts.


Consumers have developed a reputation for being rate savvy in recent years. Mistrust in the banking industry as a whole coupled with a rise in on-line technology has seen the arrival of comparison and money advice sites that empower consumers. These services aim to help users maximise their incomings whilst reducing outgoings, and to search for the best deals in the market. Customers no longer tolerate a poor return on their money or inadequate service. Whilst our parents and grandparents tended to stick with a bank for life, loyalty has been replaced with seeking out the best deal for not only current accounts, but other financial products like personal loans, foreign currency and life insurance.


A new benefit a number of banks have introduced is current accounts that offer cashback. These work much like a reward card, in that bill payments or purchases by Debit card at selected retailers provide the customer with a cash back amount, which tracks and can be transferred for cash, or exchanged for vouchers for major high street retailers or restaurants. Many are also offering cash incentives to customers to open accounts, with a select few even offering a payment to customers who are dissatisfied and decide to leave within a set period.


Banks in West London, Britain - 04 Nov 2008
With collapsed trust in high street banks and the rise of customers switching their accounts to take advantage of enhanced benefits, it’s clear that consumers have been provided with the upper hand in this ‘buyers market’. Technology has diversified and improved the products on offer, and the increasing number of FinTech start ups even in the UK alone promises innovation in financial services. What this means to the UK customer is increasingly relevant and sometimes even tailored financial products and financial choices with more freedom.


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