Whether you're moving bank accounts for a better overdraft rate, better service or a bit of extra cash each month, you want to do it right: quickly and with as little hassle as possible.
In this guide we show you how.
Leaving aside the time it takes to decide to move, we reckon that switching current accounts should take about three weeks (21 days).
Here's how that breaks down:
Now we'll go through those steps in more detail.
Once you've decided on a new current account, you'll need to apply with the bank in question.
For this you will need:
Assuming that you're filling out the form online, the whole process normally takes fifteen minutes to half an hour.
If the application is successful, account transfer, if it was requested, is usually the next step.
To switch over your direct debits and standing orders, your new bank is required by law to request details from your old bank within three working days from the approval of your application. Your old bank then has three working days to supply the information.
Your new bank will then make a copy of the list available to you. The new bank will ask your old bank to cancel all payments you have with them. It will then inform your direct debit companies of your new account, supplying them with your new details. It will also set up new standing orders.
Note that automatic switching, which some banks call a 'switching service', is far preferable to moving direct debits yourself.
It can take around eight weeks to move standing orders/direct debits as an individual because companies may take time to pass along their information and, obviously, it's a time drain.
Should you plan around direct debits?
There's a school of thought that it's best to plan the switch date for your direct debits/standing orders carefully to avoid ending up in the red while you're in between banks.
If all your transactions take place around the same time monthly, opt for a date just after payments leave.
If direct debits/standing orders are spread out, go for a date just after the largest sum exits the account.
However, people can worry about this too much. The above are good rules of thumb but moving is in the bank's control so it's up to them to see that payments are both moved and met.
For this reason, many banks now offer interest free 'switcher' overdrafts to ensure that people moving over aren't hit by charges as soon as they arrive.
For example, Halifax and Nationwide offer a completely free planned overdraft for the three months following the switch.
However, bear in mind that to qualify for that overdraft you are most often required to transfer existing payments from your old account using the bank's switching service. Another good reason not to move payments yourself.
With payments moved, there are just a few loose ends to tie up.
Shutting down your old account
If your new bank hasn't agreed to do it for you, inform your old bank if you want your current account closed and if you want your whole balance transferred to the new bank during the application process.
You also need to let the old bank know if there's any direct debits/standing orders that should not be switched over to the new account.
If you are completely closing down your old bank account, you need to return all chequebooks and debit cards, or confirm they have been destroyed.
If transferring a balance to a new account, confirm the date in which you wish the transfer to be made.
Should you shut old accounts?
People often ask whether having multiple accounts can impact on credit worthiness.
If you have always had a good rating, changing banks shouldn't majorly affect your score.
However, closing down your old account could make a slight difference when applying for a credit card or mortgage as staying with a bank long term can suggest financial stability.
For this reason you may want to consider keeping the old account open but dormant, ready to use should you make such an application in the future.
If you move houses quite regularly or are looking to buy, this may apply to you more. If you are already a homeowner, it may be less of an issue.
In addition, an account overdraft (if you have one) can be regarded as an open line of credit.
If you don't want it to appear like that to a potential lender, or if you really don't trust your spending habits with two overdrafts, it may be safer to close the old account down.
Informing employers and other sources of income
Remember that you also need to inform anyone paying money into your account about your new details.
Your bank may provide you with template letters to send out to anyone that regularly deposits money into your account. If not, you can often download one from the new bank's website.
Particularly if you were drawn to your new account by a special deal or incentive, it's worth keeping an eye on a new current account in the first few months.
Before you even sign up to the new bank read the small print and know what conditions are required and make sure that you are fully applicable for the rewards.
For example, some accounts require £1,000 to be paid in each month for the account to be deposited with a cash reward.
Other criteria, especially for one off 'welcome' cash payments, might include a certain amount of direct debits/standing orders set up to the account within the first few months or weeks.
Dealing with problems
Currently, the banking watchdog FSA requires that new accounts should be opened within ten working days of application approval.
If it takes longer you are within your rights to demand a chase up.
If the bank botches transferring direct debits and that results in charges you are certainly entitled to the money back.
Finally, if you are experiencing problems it may cheer you to hear that things are getting better.
Following a report from the Independent Commission on Banking, the Government will force banks to agree to a new 'redirection service' for current accounts, where banks will be given a seven day window to make the switch for you, by September 2013.
So when the new service kicks in jumping accounts when you're not happy with your current service will be easier and simpler than ever before.
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