Banking, loans and cards

‘Interest rates are the biggest account-switching motive’

The chance of earning a better return on their money is the leading incentive for those who have moved banks, according to stats released on the eve of the second anniversary of the current account switching service.

About two people out of every five who have taken advantage of the service have listed better interest rates as being the primary motivation.

That’s perhaps to be expected given the paltry returns available for savers at the moment, with several current accounts offering far better rates than are available in dedicated savings accounts.

“The importance of high in-credit interest rates has soared, which isn’t a surprise as the interest available on easy-access savings accounts remains so low,” says Kevin Mountford, of Moneysupermarket, which carried out the research.

“The introduction of the current account switch service has definitely driven banks to be more innovative and keen to offer attractive incentives, resulting in a market rife with competition.

“The service has also motivated consumers to seek out accounts that suit their needs and boosted peoples’ confidence to move to a new bank given the ease they can do this now the service is in place.”

Current accounts that prove particularly attractive to consumers looking for decent rates of return include offerings from Nationwide and TSB, which both pay credit interest of 5%. The leading easy-access account, meanwhile, is from Kent Reliance Building Society, and that pays just 1.65%.

Only 5% of those who have used the switching service gave poor customer service as their reason for doing so.

Michael Chambers, chief executive of Bacs, which is behind the switching service, says: “More than two million people have successfully moved between banking providers using the service since it launched in September 2013. This year alone, over half a million switches have already taken place.”