Kia Commodore: Hey, this is Kia, and today I'm asking, are all
Kia Commodore: bank accounts equal? What benefits and features can you get?
Kia Commodore: A lot of us sign up with a bank and stick with
Kia Commodore: them for life, but what's the cost of loyalty, and
Kia Commodore: more importantly, can we get a little bit richer by
Kia Commodore: switching allegiance? Welcome to another episode of A Little Bit
Kia Commodore: Richer, brought to you by my friends at Legal & General.
Kia Commodore: To help us figure all this out is a friend
Kia Commodore: of the show, Andy Webb, host of the Cash Chats
Kia Commodore: podcast and the man behind the award- winning Be Clever
Kia Commodore: With Your Cash blog. Welcome back, Andy.
Andy Webb: Hey, Kia.
Kia Commodore: A lot of people open a bank account and stay
Kia Commodore: with the company forever after, but they may be missing
Kia Commodore: out. Some banks offer a cash bonus to switch, and
Kia Commodore: a new account could offer extra features, a free overdraft
Kia Commodore: facility, and other rewards. When is it time to switch
Kia Commodore: bank accounts, and how easy is this process?
Andy Webb: I'd say now. Now's the time to switch. If you've
Andy Webb: got a current account and it doesn't do anything for you, there's no perks,
Andy Webb: there's no features, it's a frustrating online banking experience, there's
Andy Webb: no reason why you should stick with them. We'll talk
Andy Webb: about switching properly in a second, but I do want
Andy Webb: to say first of all is you don't have to
Andy Webb: switch to change bank. There's no limit to how many
Andy Webb: current accounts you can have. I've lost count. It's my
Andy Webb: job, right? So obviously I have to kind of look at different
Andy Webb: account stuff. I've got like 14, 15 current accounts, and
Andy Webb: that's fine. It's not a problem. So you can open
Andy Webb: up extra accounts for some of these features, but there
Andy Webb: are reasons to switch and if you do want to
Andy Webb: switch, it is really, really, really simple. So effectively, you
Andy Webb: open up that new current account that you want to
Andy Webb: go to, and then during the application process, near the
Andy Webb: end it says " Do you want to switch your bank?"
Andy Webb: And if you do, it will... Basically this thing called the current account switch
Andy Webb: in service, and this has a guarantee. So within seven
Andy Webb: working days they will move all the money that's in
Andy Webb: your existing current account over to the new account. They
Andy Webb: will transfer the standing orders, the direct debits. They're going
Andy Webb: to come out. You don't have to go to your
Andy Webb: gas company or whoever it is and get them to change it. It's
Andy Webb: all done for you, really nice and simple, and so it's
Andy Webb: all done within seven working days. And if something goes
Andy Webb: wrong, and I've done this so many times, nothing's ever
Andy Webb: gone wrong, but sometimes it could go wrong. If it
Andy Webb: does go wrong, then you would get compensation. It's important
Andy Webb: to say, when you do this, this is known as
Andy Webb: a full switch, that the old current account is closed
Andy Webb: down. So that doesn't mean you have your new account
Andy Webb: details, new sort code, new debit card. The only thing
Andy Webb: that doesn't get transferred across basically is anything you've made
Andy Webb: a payment with with that long card number on that
Andy Webb: debit card. Those things you're going to have to go
Andy Webb: into again and put new card details in. Everything else,
Andy Webb: moved over in seven working days. And also, it doesn't
Andy Webb: stop there, because the old bank will forward on any
Andy Webb: extra payments effectively, forever. Let's say, in a year's time,
Andy Webb: you've gone out for dinner with a mate, you've split
Andy Webb: the bill, but they haven't got the cash, they need
Andy Webb: to transfer it to you. They've got your old account
Andy Webb: details, it's fine. That will just almost straight away appear
Andy Webb: in your new account, so you don't have to worry
Andy Webb: really about anything at all. That's a full switch. There
Andy Webb: is something called a partial switch which doesn't have that
Andy Webb: guarantee, but if you did want to keep the old
Andy Webb: account open, but you wanted to move the direct debits
Andy Webb: over or whatever it might be, you can do a
Andy Webb: partial switch. Not all banks will let you do that,
Andy Webb: but it's just worth knowing it does exist as well.
Kia Commodore: I'm glad you mentioned how easy it is to switch, because sometimes it
Kia Commodore: can feel overwhelming. You're like, " Okay, I need to move
Kia Commodore: things over and I've got to manually do this, that, and
Kia Commodore: a third." But there is, like I said, the current account
Kia Commodore: switch service, or CAS, that is there to do it,
Kia Commodore: and that guarantee gives you peace of mind to know
Kia Commodore: that if anything goes wrong, you're completely covered. And a
Kia Commodore: lot of people are under this idea that you can't
Kia Commodore: have more than one or two, because maybe it's part
Kia Commodore: of your credit score or... It doesn't really have an effect,
Kia Commodore: does it?
Andy Webb: I think we're talking in a moment about there is a
Andy Webb: kind of an element you to be aware of your
Andy Webb: credit score when you do this, but ultimately, if you
Andy Webb: do it sensibly, I think there are advantages. And also
Andy Webb: sometimes banks have problems with the apps, and they go down for a day.
Andy Webb: We don't like it, but sometimes it happens. If you've
Andy Webb: got more than one current account and you've got some
Andy Webb: money in those other current accounts, at least you can kind of
Andy Webb: get by, and you could still do stuff. So there
Andy Webb: there's lots of really good reasons to have more than one.
Kia Commodore: Exactly. I agree with you. So we won't get too specific because
Kia Commodore: things can change very quickly, but there are some great
Kia Commodore: rewards that you can get from switching, so let's go
Kia Commodore: through a few of them together.
Andy Webb: Yeah. The big one where you absolutely have to switch
Andy Webb: and do a full switch to get it is the
Andy Webb: cash bonus. I made thousands of pounds doing this, and
Andy Webb: this is when the switching offers were around like a
Andy Webb: hundred quid and stuff. Now, the last couple of years,
Andy Webb: we've been seeing some of them going up to 200
Andy Webb: quid if not beyond that, and that's basically a bribe.
Andy Webb: The new bank saying, " Hey, look, come over to us,
Andy Webb: and we'll give you cash." And that is a really
Andy Webb: good reason. If you need some money, a really good
Andy Webb: reason to go ahead with a switch. Other reasons you
Andy Webb: might want to change your bank, and you might want
Andy Webb: to switch this or open up an additional account to
Andy Webb: get it. Again, there are so many. A lot of them
Andy Webb: offer little perks, so maybe free cinema tickets or free
Andy Webb: Disney plus, things like that. Some of them might have
Andy Webb: linked savings accounts that you can only get if you have
Andy Webb: their current account, and those rates that have on those
Andy Webb: accounts often amongst the best ones out there. Oh, there's
Andy Webb: so much. I mean, you mentioned about overdrafts before. There
Andy Webb: aren't many of these, but some of them will give you
Andy Webb: a naught percent overdraft over a small buffer or for
Andy Webb: a year. Again, that could be a really big help
Andy Webb: when it comes to debts. Another big reason to change
Andy Webb: your bank again is that the online banking and the app,
Andy Webb: some of these newer banks, and they're not even new
Andy Webb: anymore, they've been going for such a long time, but
Andy Webb: the day- to- day banking, so much easier. From the ground
Andy Webb: up, they've been designed, these apps, to do that. So
Andy Webb: again, a really good reason to change your bank. Again, there's
Andy Webb: so many more, but they're the kind of headline ones.
Kia Commodore: I think that's great. There's so many rewards out there that people just don't realize, but if you
Kia Commodore: just made that switch, I mean obviously some people, they
Kia Commodore: feel like they want stay one bank, fine, but if
Kia Commodore: you do want to switch, like you said, you've made thousands.
Kia Commodore: That's good. It sounds like a little side hustle. You've
Kia Commodore: got us a little side hustle hack there. You can get free
Kia Commodore: cinema tickets, all those kind of things. It's really good
Kia Commodore: to have a look at. But for anyone who's considering
Kia Commodore: it, how can they compare between different accounts and to
Kia Commodore: make that decision a lot easier for them?
Andy Webb: Yeah. I think you've really got to look at what's
Andy Webb: on offer and look at the bank's own site. They'll
Andy Webb: take you through those different features, those savings accounts, the
Andy Webb: rewards, whatever it might be. There are loads of videos
Andy Webb: and reviews that you can find online that will take
Andy Webb: you through the pros and cons on becleverwithyourcash. com. Like
Andy Webb: anytime there's one of those switching deals pops up, I'm
Andy Webb: writing a full analysis of that and telling you what
Andy Webb: you need to do. Because some of these will have
Andy Webb: terms and conditions attached. It's not a simple case of
Andy Webb: you just do this. If you want that free cash,
Andy Webb: they might want you to deposit a certain amount of
Andy Webb: money in a certain amount of time, or have a
Andy Webb: couple of direct debits that come out every single month,
Andy Webb: or you have to check the app once a month.
Andy Webb: Although for the switching deal or some of those ongoing
Andy Webb: offers, some of them might have fees. Now if you
Andy Webb: do everything right, then the rewards you get will wipe
Andy Webb: out the fee, but you've got to do it right,
Andy Webb: otherwise you might end up costing you money. So be
Andy Webb: really careful, all that stuff. Do check all those terms
Andy Webb: and conditions. But you do all that, I think it's
Andy Webb: going to be a nice and simple kind of process
Andy Webb: for you.
Kia Commodore: Absolutely. I think the last time I did it, I
Kia Commodore: switched over but one of those caveats was that I
Kia Commodore: had to deposit, I can't remember how much the money
Kia Commodore: was, but a certain amount of money for six months
Kia Commodore: before I could get that money into my account, and
Kia Commodore: I had to make it a real process to remember
Kia Commodore: to put that money in every month. I set an
Kia Commodore: alarm, put it in there, and I finally got that
Kia Commodore: reward. So it's just being aware. Reading that fine print,
Kia Commodore: that's what you're getting into. It's not just you can
Kia Commodore: get 200 pounds to switch in, but maybe you have
Kia Commodore: two direct debits, put a certain amount like you said. It's
Kia Commodore: just being aware of what there is.
Andy Webb: Yeah. And weigh up whether it's worth your time. I
Andy Webb: see some deals and I say to people that I
Andy Webb: personally wouldn't bother with it. They want it, they might do
Andy Webb: 20 transactions on your debit card every single month just
Andy Webb: to get two pounds. I'm like, " Actually, is it really
Andy Webb: worth your time?" And you might better off spending that time
Andy Webb: with some other kind of side hustle or just enjoying
Andy Webb: your life. So you weigh these things up. Is it
Andy Webb: going to be worth the time you put into it?
Andy Webb: But overall, yeah, I mean you can have anything from
Andy Webb: just a couple of current accounts. We have a couple
Andy Webb: of rewards and features through to like you and I
Andy Webb: with quite a few.
Kia Commodore: Quite a few.
Andy Webb: There is admin with that.
Kia Commodore: Yes, there is.
Andy Webb: You've got to keep on top of it, but you can cycle
Andy Webb: money throughout the different accounts, all that kind of stuff.
Andy Webb: So it is definitely manageable, but maybe build up to that.
Kia Commodore: Build up to that. So let's go back to banks then.
Kia Commodore: There's this debate that's always going on, and it's traditional
Kia Commodore: banks. So when we say that we're talking about your
Kia Commodore: typical brick- and- mortar banks, maybe like HSBC or Nationwide
Kia Commodore: versus digital banks, which is like Monzo and Starling. What
Kia Commodore: should people look out for to decide what's actually better
Kia Commodore: for them? So how can we know what's better, and
Kia Commodore: what are the important things that we should look out for?
Andy Webb: Yeah. There's no right or wrong answer here. The digital
Andy Webb: banks have some of the best apps out there, and
Andy Webb: they are obviously great ways to do your everyday banking,
Andy Webb: but you don't have access to branches. A lot of
Andy Webb: people go, "Does that really matter how often?" When did you last go
Andy Webb: into your branch?
Kia Commodore: A few years ago.
Andy Webb: Yeah. And that's why we're seeing so many branches closing.
Andy Webb: So it might well be that the other banks, there
Andy Webb: isn't a branch on your high street anyway, but it's something
Andy Webb: to be aware of. If you do want branch access,
Andy Webb: then you want to prioritize a bank that does have
Andy Webb: one near you, at least for the time being. So
Andy Webb: that's a big thing there. And as I said before,
Andy Webb: I would always have more than one account anyway. So
Andy Webb: if you have got a digital bank, I like to
Andy Webb: have a high street bank as well, one of the ones
Andy Webb: that has some of those features that we spoke about,
Andy Webb: just to kind of balance things out. There are a
Andy Webb: handful of digital banks that you need to be aware
Andy Webb: of because they're not fully licensed bank in the UK
Andy Webb: yet. They are applying for this license. They haven't got
Andy Webb: it yet. And the key ones here, the time we're
Andy Webb: recording this, are Revolut and Monese. So they are ones
Andy Webb: which don't have the financial services compensation scheme protections amongst
Andy Webb: other things. Now, this is about where, if they were
Andy Webb: to go bust, any money held would be protected up
Andy Webb: to a massive 85,000 pounds. So just be aware of
Andy Webb: that, that there is a risk there.
Kia Commodore: Yeah, that is good to know. I think, like I said, having a hybrid, it is the best of
Kia Commodore: both worlds. But it is hard. I don't think you
Kia Commodore: can pick one that's better. I think that hybrid works
Kia Commodore: nicely. So let me ask you then. We've spoken about
Kia Commodore: the benefits of switching. There's a lot of rewards you
Kia Commodore: can get, and it sounds great. So is it worth
Kia Commodore: regularly switching accounts to get the latest offers, or are
Kia Commodore: there any downsides that we need to be aware of
Kia Commodore: apart from obviously the admin that comes with it?
Andy Webb: Yeah, so a couple of things. Obviously, when you're doing
Andy Webb: the full switch, as we mentioned before, this does close
Andy Webb: your old current account, and sometimes you might have a
Andy Webb: linked product, maybe a savings account, maybe a credit card,
Andy Webb: you never know, that has all these great features and
Andy Webb: benefits, but they're only available to you if you have
Andy Webb: the current account. So just double check, if you haven't,
Andy Webb: what's going to happen to that. It might be that
Andy Webb: it's closed down or you lose the rate or you have
Andy Webb: to start paying a fee or whatever it might be.
Andy Webb: So check that stuff first of all. But other than that, I think
Andy Webb: the big thing to think about here is the impact
Andy Webb: on your credit score, particularly if you're doing repeat switching.
Andy Webb: Because every time you open up a new current account,
Andy Webb: the vast majority of the time, you're going to have
Andy Webb: a hard search appear on your credit report that will
Andy Webb: last for 12 months. It's going to stay on there.
Andy Webb: The more of these that you do, the bigger the
Andy Webb: impact that's going to have on your credit report. Now,
Andy Webb: if you haven't got anything big coming up in the
Andy Webb: next year, you don't need to get a 0% percent transfer
Andy Webb: or purchase credit card, you don't have to do a
Andy Webb: remortgage or a first mortgage application, things like that, there's
Andy Webb: nothing major coming along and your credit score is relatively
Andy Webb: healthy, then in a year's time, that will drop off,
Andy Webb: it's not going to be an issue. You can do
Andy Webb: a number of them, space it out every three months
Andy Webb: is an ideal way, and this is all your credit applications,
Andy Webb: not just bank accounts. But spread them out, just to
Andy Webb: reduce that kind of impact. But I know, I've done
Andy Webb: it myself, where I've done a number in a short
Andy Webb: space of time. You need to make that decision for
Andy Webb: your own personal situation. So that's important to know, just
Andy Webb: spacing that out. But there is another impact that switching
Andy Webb: explicitly will have on your credit report, and that's because
Andy Webb: it's that closure again of that account, that existing account.
Andy Webb: Because if you've had that for two years, five years,
Andy Webb: 10 years, 20 years, whatever, we talked beginning about how
Andy Webb: maybe you had opened it and then you've still got it,
Andy Webb: you've never done anything about it. That longevity, that kind
Andy Webb: of indication of loyalty, that is also a really good
Andy Webb: signal in your credit report. And when that account closes,
Andy Webb: you lose that, and the only way to build it
Andy Webb: back up...
Kia Commodore: Is to stay with another bank for a long time again.
Andy Webb: (inaudible) time. Yeah. So what I generally say to people,
Andy Webb: a little hack that I suggest to get around that,
Andy Webb: is to not close. Never switch that main account. Because
Andy Webb: you can open up what I call a dummy account.
Andy Webb: So it's just a separate current account. You open it up, and the only
Andy Webb: reason you're opening up this current account is you're going
Andy Webb: to use it to switch, to get that free cash,
Andy Webb: right? Open it up, credit check most of the time
Andy Webb: for that, then open up the account you want to
Andy Webb: switch to to another credit check. So that's two credit
Andy Webb: checks in a short space of time, so just be
Andy Webb: aware of that. But you do the switch, you get
Andy Webb: your free money, and the old one's still there. That
Andy Webb: loyalty is not gone. And then if you want to,
Andy Webb: that account you've switched to for the cash, well that
Andy Webb: could be another dummy account, and you can switch that one
Andy Webb: again, and again, and again. If you decide you get
Andy Webb: to an account you want to keep because of perks
Andy Webb: and benefits, well open up a different dummy account. So
Andy Webb: yeah, look into that little bit more. It's simple, but
Andy Webb: some things you need to be aware of, but they're the big
Andy Webb: things to think about.
Kia Commodore: I love the fact that you mentioned dummy account, because
Kia Commodore: that was something that my dad had told me a
Kia Commodore: while back when I got into switching rewards and all of that. And like I
Kia Commodore: said, I had my (inaudible) Bank that I'd been
Kia Commodore: in for ages, and he said, " You know what, leave
Kia Commodore: that." Like he said, " Leave it. The loyalty works in
Kia Commodore: your favor, but open up a separate account you're not
Kia Commodore: really that fussed about, and then you can use that." And that's
Kia Commodore: what I've been doing and it is a really, really good tip there.
Kia Commodore: Keep in mind, the application's a short space of time,
Kia Commodore: but it is a really good tip that you put out
Kia Commodore: there. So before we wrap up, Andy, what are your
Kia Commodore: top tips for listeners when thinking about their choice of
Kia Commodore: bank account?
Andy Webb: So first of all, I would just remind everyone that
Andy Webb: you can have more than one current account. So as much
Andy Webb: as you feel you can manage, you can have all
Andy Webb: the different perks and features from a number of different
Andy Webb: accounts. If you're going to switch, set up that dummy
Andy Webb: account at least for that first switch so you don't lose
Andy Webb: that kind of loyalty that you've built up on your
Andy Webb: credit report from that existing account. And then whether it's
Andy Webb: open up a new account for a perk or whether
Andy Webb: you're switching, just check those terms and conditions because you
Andy Webb: want this to be making you money or giving you
Andy Webb: a better banking experience. You don't want it to be
Andy Webb: costing you cash.
Kia Commodore: Absolutely. Thank you so much, Andy. As always, as a
Kia Commodore: friend of the podcast, you come and grace us with
Kia Commodore: so much knowledge and gems. Thank you so much. On
Kia Commodore: the next episode of A Little Bit Richer, I'm going
Kia Commodore: to be talking all about travel and how you can
Kia Commodore: head on a holiday without breaking the bank. Don't forget,
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