More than 1.38 million customers plan to ditch their bank over the next six months as current account switching takes off, new MoneyExpert.com research* shows.
The independent financial comparison website says a combination of increased competition in the current account market and customer anger over penalty charges is prompting more people to move bank. For instance, charges for a bounced range from £10 to as much as £39 with an average charge of £32.
Currently the Financial Ombudsman Service is receiving more than 1,000 inquiries a day about bank charges and has sent 3,500 letters to banks in the past six months on behalf of consumers.
At the same time banks are offering special deals including Alliance & Leicesterís Premier Direct Current Account with zero per cent on overdrafts for 12 months and 6.1 per cent AER on balances up to £2,500 until April 30 2008. Customers need to pay in at least £500 a month.
Other firms are offering low authorised overdrafts and increased credit interest rates in contrast to the average 12.6 per cent interest rate charged on authorised overdrafts and rates as low as 0.1 per cent paid when customers are in credit on their account.
Sean Gardner, Chief Executive of MoneyExpert.com, said: ìIt used to be you were more likely to get divorced than to change banks but increasingly that is not the case. ìCustomers have got the message that it is relatively straightforward to move bank and that there are a range of good value deals out there. The advice has to be that if you are unhappy with the deal from your bank you should move.
ìAnger over bank charges is adding to the pressure on banks as customers realise that it is possible to get their money back. Increasingly the banks are paying up rather than taking the dispute to the Financial Ombudsman.
ìHowever customers need to think before moving. If you are regularly overdrawn then you need an account which charges a lower rate for overdrafts while if you are always in credit you should opt for an account which pays you interest.
ìNot all banks are the same nowadays but not all accounts suit all customers. And charges for going over your overdraft limit will be imposed at all banks.”
The Office of Fair Trading is currently investigating so-called penalty fees and is due to rule in March on whether charges should be reduced in line with similar moves in the credit card market where fees are now a flat £12.
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* YouGov interviewed 2,442 GB adults (18+) between 4th ñ 8th January 2007