Current account customers hit switching record high
Some 124,615 current accounts were switched in March – marking the highest monthly total since the current account switching service was launched in September 2013. It is nearly double the 74,723 current account switches recorded in January.
The total number of switches in March this year was also 8,695 more compared with March 2015, according to the data released by payments body Bacs.
On April 6, a new personal savings allowance was introduced, which has taken 92% of savers – or nearly 17 million people – out of savings tax altogether.
Under the new allowance, basic rate taxpayers can earn up to £1,000 in savings interest tax-free, while higher rate taxpayers can earn up to £500. The new allowance means people no longer need to put their savings into an Isa to shelter the interest earned from the taxman.
Many current accounts pay rates of return which are much higher than that on a traditional savings account – at 3%, 4%, or 5%. On top of attractive interest rates, several current accounts also offer other perks, such as cashback and cash to switch.
The free-to-use current account switching service means that people can now complete their switch in seven working days – compared with up to 30 working days before the service was introduced in 2013.
For 36 months after the account has been switched, payments accidentally made to or requested from the old account are automatically redirected to the new account.
All outgoing and incoming payments are automatically swapped over to the new account for those using the switching service and a guarantee means that people will not be left out of pocket if something goes wrong with the switch.
In March, 3,841 switches were made without the guarantee. This is because the customer had chosen to also leave their old account open, and they were therefore not covered by the switch guarantee. Some 120,774 switches took place with the guarantee in March.
Bacs said market developments are behind the recent higher levels of switching, alongside a recent publicity drive about the service, which can be used by small businesses, charities and trusts as well as consumers.
Economic Secretary to the Treasury, Harriett Baldwin, said: “I am delighted that the latest figures from the current account switch service (Cass) show record levels of customers taking advantage of the service.”