Switching Current Accounts: Q&A (2023)

Many of us have stuck fast with the same current account for years. But the perks on offer to switch — such as a free overdraft, in-credit interest, or a cash welcome bonus — have arguably never been so attractive.

More than 8 million people have used the Current Account Switch Service (CASS) to change banking providers since the service was first introduced back in 2013.

From claiming switch incentives to what to do if things go wrong, here are the answers to some of the most common questions about switching current accounts.

Q: Are all banks and building societies covered by the Current Account Switch Service?

A: Not every bank and building society is signed up to the Current Account Switch Service, but as of November 2022 47 institutions — including all of the big high street names which account for 99% of all current accounts — are part of the service.

Q: Does switching current accounts involve a credit check?

A: Banks and building societies carry out a credit check on all new customers applying for a current account — but using the Current Account Switch Service to change accounts has no additional impact on credit scores.

Some banks carry out a ‘soft’ search, which does not appear on individuals’ credit reports, while others perform a ‘hard’ search that does.

Q: Can a current account application be rejected?

A: When applying for a new current account, there are a few factors that could lead to applications being turned down.

Once example is providing inaccurate information, even if the applicant is eligible for the account. If the incorrect information has been entered by mistake, it may be possible to get the issue resolved however.

A poor credit score or limited credit history can trigger a rejection too. In this case, a basic bank account may prove a better alternative. Basic bank accounts offer essential banking services only, such as making payments and receiving income. And many only carry out a ‘soft’ credit check on new applications.

Basic bank accounts do not come with overdraft facilities, and do not typically offer switching incentives.

Q: Is it possible to be a ‘serial switcher’?

A: In itself, regularly switching current accounts does not impact an individual’s chances of being accepted by a new bank or building society.

Jo Ainsely, senior service lines manager at Pay.UK, the organisation that delivers the Current Account Switch Service, explains: “There’s nothing wrong with serial switching at all. If you want to get an incentive and then move on to a better deal with a different provider, that’s absolutely fine.”

However, submitting several current account applications in quick succession could negatively impact credit scores, so it’s best avoided for applicants planning to apply for important credit, such as a mortgage, in the near future.

Q: What happens if the switch goes wrong?

A: If something goes wrong with a current account switch, the new bank or building society should be contacted straight away.

However, switching with the Current Account Switch Service provides cover under the Current Account Switch Guarantee. This means that, for example, if a direct debit or standing order payment fails to transfer to the new account, a refund will be issued for any late fees or interest incurred.

The Current Account Switch Guarantee also ensures a switch takes no longer than seven working days to complete.

Any complaints should first be put forward to the new bank and then to the Financial Ombudsman Service if the response is not satisfactory.

Q: Banks sometimes limit switching incentives to ‘new customers’ — what does this mean exactly?

A: Different banks impose different criteria when it comes to deciding who’s eligible for a switch incentive.

Some banks pay an incentive to anyone who switches to them, while others are more discerning.

For example, some banks won’t pay an incentive if they have already paid one to that customer in the past, while others stipulate that the customer cannot have received an incentive within a certain timeframe.

To receive Nationwide’s £200 switch incentive* for example, switchers cannot have opened a Nationwide current account since 18 August 2021.

However, when moving a joint account held with someone else it’s sometimes possible to side-step these rules — so long as the second account holder is a new customer.

Note that these criteria only apply to current accounts. Holding a savings account, credit card or other product with the new provider will not impact eligibility for a switch incentive.

Q: What other switching incentive criteria are there?

A: Some banks and building societies ask new customers to meet additional criteria to qualify for a switching incentive.

These may include:

• Completing applications online or via an app
• Paying in a certain amount every month
• Setting up a certain number of direct debits
• Completing the switch before a given deadline

Check the terms and conditions carefully before applying.

Q: Will an old bank account set-up satisfy criteria to get a switch incentive?

A: Qualifying for a switch incentive often involves crediting the new account with a certain balance or setting up direct debits. But any direct debits, incoming payments and balances transferred from an old account are counted towards these criteria.

In other words, new payments only need to be set up if existing ones don’t meet the eligibility criteria once they have been moved across.

Q: What about switchingbetween providers in the same banking group?

A: Whether it’s possible to bank a cash incentive when switching between two banks that are part of the same banking group depends on the specific terms and conditions. If in doubt, switchers should contact their current bank.

Q: How long before it’s possible to switch again?

A: As soon as a switching incentive has been received, customers are free to switch again and pursue another one.

When the Current Account Switch Service first launched, some banks only offered incentives to customers who maintained their account for a set period of time — typically three months.

However, institutions soon dropped this requirement. Ms Ainsley comments: “Over time, I think the banks realised they don’t need all those very rigid terms and conditions in place. The more conditions you attach, the more you lose customer appetite.”

However, some banks and building societies only offer switching incentives to customers who have not opened an account with them in the recent past.

Q: Does an old current account have to be closed to receive a switching incentive?

A: Usually, yes. The majority of switching incentives require customers to make a ‘full switch’ with the Current Account Switch Service before they can claim their bonus, which by definition involves closing the old account.

If a new account is opened without the old one being closed, it only counts as a ‘partial switch.’

Using the Current Account Switch Service closes the old account automatically.

Q: Is it mandatory to use the Current Account Switch Service to qualify for a switching incentive?

A: Usually, yes.

Banks occasionally offer a smaller incentive just for opening a new account. But typically for the full bonus, the switch must be completed under the Current Account Switch Service.

For example, HSBC pays customers £200 when a full switch is completed via the Current Account Switch Service.

Banks and building societies ask customers to use the service so they can ensure a full switch has been carried out.

Ms Ainsley explains: “If you switch manually, there’s no way the new bank can prove you’ve closed your old account. Ultimately, this is about the new bank being able to make sure the transition has happened correctly.”

Q: How long does it take for switching incentives to be paid?

A: This depends on the new provider but it could be anything from a matter of days to a month or two.

For example, Nationwide and Lloyds can pay incentives in as little as 10 working days.

Q: Do switching incentives ever need to be repaid?

A: So long as the new bank’s switch incentive terms and conditions are met, any bonus will not need to be repaid.

Ms Ainsley said: “Switch incentive terms and conditions are usually very watertight. In all my time involved with CASS, I’m not aware of a loophole that allows a bank to take your switching bonus back.”

Q: Is it worth switching without an incentive?

A: There are several reasons other than an incentive that can make moving to a new current account worthwhile.

Some accounts offer perks such as cashback on bills, in-credit interest and free or more competitive overdrafts.

It’s still possible to switch current accounts with an existing overdraft.

Ms Ainsley says: “While we know large incentives are a draw for people, we do still encourage them to ensure that the account they’re switching to can give them everything they need in a current account to do their day-to-say banking.”

* All switch incentives details mentioned in this article were correct at time of publication but are subject to change