Money saving experts at MARTIN Lewis have issued a warning about changing your bank account.
The financial guru’s site has urged customers to be careful as it could look “strange”.
Switching banks is a standard practice, but under certain circumstances it can put your credit score at risk.
Lewis’ MSE warns that if you want to buy a house and get a mortgage, it is best to wait to change banks.
Stick with your current provider if an important credit application is coming up.
MSE explains that changing your bank frequently can affect your credit rating.
It says: “Generally speaking, one additional search on your credit file shouldn’t make much of a difference (although a lot in a short period of time might).
“Yet there are times when you have to wait a while, for example if you are going to apply for a mortgage soon.”
The experts added: “Frequently changing banks can affect your ability to get credit in the future, as the applications on your file show, and may indicate a lack of stability.
“If you do it sensibly it’s usually not that bad, but multiple requests in a short period of time can look strange.
“So if you have a major credit need (such as a new mortgage), wait six months in advance.”
Many choose to create a second burner account just to earn exchange freebies every time they jump from one bank to another.
Switching bank accounts has long been an easy way to get free cash.
But make sure you keep an eye on how this affects your credit score, in case multiple applications drag your credit rating down.
MSE wrote: “Most serial switchers make their money over years, rather than weeks or months, so think of it as a marathon rather than a sprint.”
Also keep in mind that when switching banks you will also need to consider other factors such as customer service if this is important to you, or the availability of an overdraft if you need one.
If you do decide to switch, the process is relatively simple thanks to the Current Account Switching Service (CASS).
How can I switch bank accounts?
Switching bank accounts is a simple process and can usually be done through the Current Account Switch Service (CASS).
Dozens of major banks and building societies have signed up; there is a full list on the CASS website.
With the switching service, switching banks would take seven working days.
You do not have to remember to transfer the direct debit when you move, as this will be done for you.
All you have to do is apply for the new account you want, and the new bank will notify your existing account that you are moving.
However, there are a few things you can do before you switch, including choosing your switch date and transferring any old bank statements to your new account.
For old statements, you must contact your existing bank.
When switching to another checking account, consider what other benefits come with membership of a specific bank or building society.
Some banks offer 0% overdraft fees up to a certain limit, and others may offer better rates on savings accounts.
And some banks offer free travel or cell phone insurance with their checking accounts, but these accounts may charge a monthly fee.
Through CASS, customers can choose their transfer date and leave it to the banks to move any active direct debits to their new account.
Currently, four major banks are offering new current account customers free cash worth up to £220.
We’ve listed the best bank accounts you can switch to right now to get up to £220 in free cash, and explain what you need to do to qualify for each account.
HSBC
- up to £220 free cash, including £10 per month cashback for a year. In addition, you get access to a linked saver who pays 5%
The current switching offer at HSBC means new customers can get up to £220 by switching from their current bank to an HSBC UK Advance or Premier account.
The money is paid out in separate amounts. You will receive one lump sum of €100 for switching, and after that you can earn €10 per month in cashback for 12 months.
Certain criteria must be met to get the full £220 and the switching process must be done through CASS.
CASS is a free service that allows you to easily exchange your old current account for a new one.
You just need to contact your new bank to apply for their checking account. If you are accepted, they will offer to transfer for you.
To receive the first payment of £100 you must meet the following criteria:
- Apply for an HSBC Advance or Premier bank account on or after March 11 and successfully open the account
- Change an existing account from another bank using the CASS within 30 days of opening the account
- The switch must include at least two direct debits or standing orders
- Deposit at least £1,500 into the account within 60 days, divided into one or more payments
- Make at least 20 transactions with your HSBC debit card
- Register and log in to mobile banking
- Open an Online Bonus Saver account and deposit a minimum of £50
If new customers complete all the steps above, they will receive €100 in their checking account within 30 days.
To get the extra £120, they must complete some of the above steps every month for a further 12 months.
Customers must continue to log into mobile banking, pay £1,500, complete a minimum of 20 transactions and keep their direct debit active each month, as well as making a monthly deposit of £50 into their online bonus savings account.
For each month they meet these criteria, €10 will be paid into their account up to a maximum of €120 or twelve monthly payments, before the 20th of the following month.
Please note that this extra money is dependent on meeting the monthly criteria, so if you miss a month you will miss out on that month’s £10 bonus payment.
NatWest and Royal Bank of Scotland
- £200 free cash and up to £36 cashback per year. In addition, you get access to a linked saver who pays 6.17%
NatWest and the Royal Bank of Scotland (RBS) are offering newcomers £200 to switch their current accounts to an Everyday, Reward or Premier account using the CASS.
To receive the money, you must deposit €1,250 into your new checking account and log into the mobile banking app within 60 days of switching.
Once you have done this, the money will be deposited into your account within seven days.
You cannot switch if you have received a switching incentive from the NatWest Group, of which RBS is part, since 1 January 2020.
Customers who switch to NatWest or RBS’s Rewards bank account can also earn up to £5 cashback when they use their card, but they will have to pay £2 per month.
This means that they can earn a total of € 36 cashback over the entire year.
The Everyday checking account from both banks does not offer cashback, but is free of charge.
Meanwhile, there are three Premier accounts to choose from: Premier Select, Premier Reward and Premier Reward Black.
There are no monthly fees for the Premier Select account, but there are £2 and £31 monthly fees for the Premier Reward and Premier Reward Black accounts respectively.
Lloyd’s Bank
- £175 free cash and a 12 month Disney+ subscription. In addition, you get access to a linked saver who pays 6.25%
Lloyds Bank is offering a £175 cash bonus to anyone who switches to one of three current accounts from another bank.
The Lloyds offer is only available to customers switching to a Club Lloyds, Club Lloyds Silver or Club Lloyds Platinum current account.
Customers must switch from a current account to Lloyds by Thursday, March 28 to avoid missing out.
They will then need to make two direct debits to qualify for the cash bonus, which will be paid out within ten working days of the start of the switch.
Customers can also choose from one of the following rewards:
- Disney+ free for a year (a saving of £79.90)
- Six movie tickets
- Membership of the Coffee Club and Gourmet Society
- Magazine subscription
There’s a catch, though: the Club Lloyds bank account has a monthly fee of £3 unless you pay at least £2,000 every month.