MARTIN Lewis’ money-saving experts have issued a warning against switching bank accounts.
The financial guru’s site urged customers to be careful as it may look “strange”.
Changing banks is a standard procedure, but in certain circumstances it can risk affecting your credit score.
Lewis’ MSE warns that if you want to buy a house and sign a mortgage, it’s best to hold off on changing banks.
When you have an important loan application, stick with your current provider.
MSE explains that regularly switching banks can affect your credit rating.
It says, “In general, one additional search on your credit file shouldn’t make a big difference (although many in a short period of time can).
“However, there are times when you should put it off, such as when you are applying for a mortgage soon.
The experts added: “Changing banks regularly can affect your ability to get a loan in the future as the application appears on your file and could indicate a lack of stability.
“Done sensibly, it’s usually not a big deal, but multiple applications in a short amount of time can look odd.
“So if you need an important loan (like a new mortgage), START six months in advance.”
Many people choose to create a second burner account just to earn switching rewards every time they hop from one bank to another.
Switching your bank account has long been an easy way to get free cash.
However, be sure to monitor how it affects your credit score if multiple applications lower your credit rating.
MSE wrote: “Most serial switches make money over years rather than weeks or months, so think of it as a marathon rather than a sprint.”
Also remember that when you switch banks, you should also consider other factors, such as customer service if that’s important to you, or the availability of an overdraft if you need it.
If you decide to switch, the process is relatively easy thanks to the Current Account Switch Service (CASS).
How can I change bank accounts?
SWITCHING bank accounts is a simple process and can usually be done through the Current Account Switching Service (CASS).
Dozens of major banks and building societies are registered – the full list is on the CASS website.
As part of the change service, switching banks should take seven working days.
When you move, you don’t have to remember to transfer direct debits, because it will be done for you.
Just apply for the new account you want and the new bank will tell your existing one that you’re moving.
However, there are a few things you can do before you switch, including choosing a switch date and transferring any old bank statements to your new account.
You should contact your existing bank for any old statements.
When changing your current account, consider what other benefits joining a specific bank or building society can bring.
Some banks offer 0% overdrafts up to a certain limit and others may offer better rates on savings accounts.
And some banks offer free travel insurance or mobile phone insurance with their checking accounts – but these accounts may come with a monthly fee.
Through CASS, customers can choose a transition date and let the banks move all active direct debits to their new account.
The big four banks are currently offering up to £220 worth of free cash to new customers with current accounts.
We’ve compiled a list of the best bank accounts you can switch to now to get up to £220 in free cash, and explain what you need to do to qualify for each.
HSBC
- up to £220 in free cash, which includes £10 cashback per month for one year. Plus you get access to a linked saver with 5%
HSBC’s current switch offer means new customers can get up to £220 by switching from their current bank to an HSBC UK Advance or Premier account.
The money is paid out in separate amounts. You’ll get a one-off payment of £100 to switch and then earn £10 cashback per month for 12 months.
In order to receive the full £220, certain criteria must be met and the transfer process must be completed through CASS.
CASS is a free service that allows you to exchange your old current account for a new one without any problems.
Just contact your new bank and ask for their checking account and if they accept you they will offer you the switch.
To claim your first £100 you must meet the following criteria:
- Apply for an HSBC Advance or Premier bank account on or after March 11 and you will be successful in opening the account
- Transfer an existing account from another bank using CASS within 30 days of account opening
- The switch must contain at least two direct debits or standing orders
- Deposit at least £1,500 in one or more payments within 60 days
- Make a minimum of 20 transactions using your HSBC Debit Card
- Register and log in to mobile banking
- Open an Online Bonus Saver account and deposit at least £50
If new customers complete all the steps above, they will receive £100 in their checking account within 30 days.
In order to receive the additional £120, they must continue to carry out a number of the above steps each month for the next 12 months.
Customers must continue to log into mobile banking, pay £1,500, make a minimum of 20 transactions and keep their direct debits active each month, with a £50 monthly deposit added to their online bonus saver account.
For each month they meet these criteria, £10 will be paid into their account up to a maximum of £120 – or 12 monthly payments – by the 20th of the following month.
Note that this extra cash is dependent on meeting the monthly criteria, so if you miss a month you’ll lose the £10 bonus payment for that month.
NatWest and Royal Bank of Scotland
- £200 free cash and up to £36 cashback per year. Plus you get access to a linked saver for 6.17%
NatWest and Royal Bank of Scotland (RBS) are offering £200 to newbies to switch their current accounts to an Everyday, Reward or Premier account using CASS.
To get the cash, you’ll need to deposit £1,250 into your new current account and log into your mobile banking app within 60 days of switching.
Once you do so, the money will be credited to your account within seven days.
You will not be able to switch if you have received an incentive to switch from the NatWest group, of which RBS is a part, from 1 January 2020.
Customers who switch to a NatWest or RBS’ Reward bank account can also get up to £5 cashback when they use their card – but will have to pay a £2 monthly fee.
This means they could get £36 cashback for the whole year.
The Everyday current account from both banks does not offer cashback, but is fee-free.
Meanwhile, there are three Premier accounts to choose from: Premier Select, Premier Reward and Premier Reward Black.
There is no monthly fee for the Premier Select account, but there is a monthly fee of £2 and £31 respectively for the Premier Reward and Premier Reward Black accounts.
Lloyds Bank
- £175 in free cash and a 12 month Disney+ subscription. Plus you get access to a linked saver for 6.25%
Lloyds Bank is giving a £175 cash bonus to anyone who switches to one of three current accounts with another bank.
The Lloyds offer is only available to customers who upgrade to a Club Lloyds, Club Lloyds Silver or Club Lloyds Platinum current account.
Customers must switch from any current account to Lloyds by Thursday 28 March to avoid missing out.
They will then need to move two direct debits to qualify for the cash bonus, which will be paid within ten working days of the start of the move.
Customers can also choose one of the following rewards:
- Disney+ free for a year (saving £79.90)
- Six movie tickets
- Membership in Coffee Club and Gourmet Society
- Magazine subscription
There’s a catch though, as the Club Lloyds bank account comes with a £3 monthly fee unless you pay in at least £2,000 each month.