Britons concerned about the cost of living crisis have been taking full advantage of current account switching bribes offered by banks, data shows.
NatWest enjoyed the highest influx of current account switchers against its rivals during the first three months of the year, according to the latest official figures.
More than 33,000 people switched to the bank between January and March, likely attracted by its £150 cash incentive that became available in January.
Overall the bank recorded 19,464 more switchers than it lost during that time, according to the current account switch service – more than any other bank.
Top dog: Official data shows that from January to March 2022, NatWest had the highest net switching gains of any current account provider.
The next best performing provider was Nationwide, attracting 12,503 more switchers than it lost.
Andrew Hagger, personal finance expert at MoneyComms said: ‘NatWest’s spike in figures coincided with its £150 incentive which started in the last week of January
‘Some 33,000 or so signed up to NatWest in the first quarter of this year and at £150 a pop that’s nearly £5million in incentive payments.
‘Whether that is good value for money, I think depends on how many of those new customers stick with NatWest and how many soon switch elsewhere in search of the next cash freebie.’
Similar to NatWest, Nationwide is also thought to have drawn in a large numbers of switchers through its cash incentive.
Since August last year, Britain’s biggest building society has paid £125 to existing members who switch their current account, while completely new customers receive £100 for switching.
Since the start of 2014, Nationwide has attracted almost 675,000 more switchers than it has lost, making it the most successful of all the providers based on the CASS figures.
However, cash handouts appear to be not the only factor attracting current account users to switch bank.
‘We may have lost one battle but we’re winning the war:’ Nationwide has added 675,000 more customers than it has lost through the switching service since early 2014.
Online and mobile banking, the ease of using the app, and customer service continue to be the top reasons for people preferring their new current account, according to CASS.
It’s also worth pointing out that for the second consecutive quarter, two digital banks have appeared in the top five.
Starling Bank recorded 11,888 in net customer gains whilst Monzo Bank secured 3,222 more switches than it lost.
But Monzo’s net gains appear to be slowing down when compared to how much stronger its figures were in 2019 and 2020.
Hagger adds: ‘Perhaps the novelty of banking with Monzo may have worn off a little or people switching away for cash incentives is maybe becoming more common.
‘Starling remains the stronger of the neobanks by some stretch when it comes to the official switching figures,
‘It must be doing something right – it gains more and loses less each quarter compared with Monzo so it’s clear people are happier to stay.’
In terms of the banks that lost the most customers in current account switches, there are some familiar names.
During the first three months of 2022, TSB lost 13,120 more customers than it gained, Barclays lost 12,851 more than it gained, whilst Halifax suffered net losses of almost 12,000.
Neither TSB and Barclays have been offering cash incentives. TSB has lost 115,000 more customers than it has gained since 2014 whilst Barclays has lost almost 500,000 more customers than it has gained using CASS during that time – more than any other bank.
However, Halifax appears keen to reverse its fortunes. Last week, the bank introduced a £150 cash offer to new joiners.
For anyone weighing up which current account might be best for them, check out This is Money’s pick of the best current accounts for interest, perks, packages and overdrafts.
|Brand||Net customer losses|
Should you switch current account?
One in six current account holders are actively thinking about switching, whilst another 13 per cent are considering switching but have not yet started looking, according to CASS.
Many people are put off switching because they think it will be a faff, or worse, it may cancel important direct debits relating to bills, mortgage or rent for example.
There are also concerns about whether income from salary will be redirected to the new account.
The switching service has tried to address all of these issues. CASS confirmed that it completed 99.7 per cent of switches within seven working days, whilst 89 per cent of end users were likely to recommend using the service.
Switching away: Barclays has lost almost 0.5 million more customers than it has gained since the start of 2014.
In terms of the common concerns around switching, all payments going out, such as direct debits, and those coming in, such as salary, will automatically be moved from the old account to the new one.
Payments accidentally made to or requested from the old account will be also automatically redirected to the new account for as long as the facility is required.
The Current Account Switch Guarantee means that a switcher will receive a refund for any interest or charge on their old or new current accounts if anything goes wrong with the switch.
End users can switch if they are overdrawn but they will need to agree any overdraft facilities required with their new bank or building society.
|Bank of Scotland||-6,884|
|Bank of Ireland||-22,826|
|Clydesdale Bank/ Virgin Money||-78,356|
|Credit: Andrew Hagger, personal finance expert at MoneyComms|
A further issue that might concern potential switchers is what might happen to their old statements and records with the bank they are leaving.
Current rules state every customer must receive copies of their transaction history when they close their account.
However, it was revealed earlier this week that some Monzo customers were not sent their historic transactions when leaving the bank.
The bank informed the Competition & Markets Authority (CMA) that it had failed to send transaction histories to over 13,000 customers, despite reporting a similar breach last year.
Digital bank on the wane: Despite consistently gaining more customers than they lose since joining the switching service, Monzo’s switching gains are starting to slow.
According to Andrew Hagger such information can be crucial to customers trying to access various financial products such as loans and mortgages.
‘The problem is that once you close your bank account you are no longer able to log into online banking and review your previous statements, so receiving this data when you move to a new bank is important.
‘If you wanted to apply for a mortgage or loan for example, the lender is likely to want to see how you’ve managed your account over the last year or two, so vital to keep such information somewhere safe – either printed copy statements or in a file on your computer.’
Cash isn’t always king: Despite cash bribes being regularly on offer, people often cite non-financial reasons when switching.
The CMA ordered Monzo to review the way it informs departing customers of their historic financial transactions.
As a result, the CMA has issued legally binding directions requiring Monzo to make sure this doesn’t happen again and to review its procedures with an independent body.
Monzo has also since contacted all affected customers to offer them a copy of their transaction history.
Are more people switching current account?
As many as 8.2million people have successfully switched using the official service since the start of 2014.
During Covid, many of the generous switching incentives all but disappeared. However they have made somewhat of a comeback over the past year – and switching volumes have followed suit.
In the 12 months leading to June 2022, current account switching volumes reached 850,243, an increase of 203,674 compared to the same period the year prior.
David Piper, head of service lines at Pay.UK, owner and operator of the Current Account Switch Service, said: ‘As life in the UK begins to return to its pre-pandemic form, we have seen an uplift in the numbers choosing to switch to a new current account.
‘This trend could continue in 2022 with many looking to take advantage of rising interest rates and the cashback incentives that some providers are currently offering.
‘Of course, rising living costs provide another reason for people to assess whether their existing current account is providing the right service for their needs, or whether moving to another current account might be a prudent move.’
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS