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More people switching current account as competition heats up

Joanna Faith
Written By:
Joanna Faith

The number of people switching current account has gone up since the start of the year, according to payment body Bacs.

In total, 248,302 switches took place in the first three months of 2017, which is more than the 208,387 switches between October and December 2016.

Bacs said there have been 3.7 million switches since the seven day current account switch service was first introduced in 2013, making it easier for customers to move banks.

In the year to March, there were 949,047 switches, down from 1.061 million from the previous 12 month period.

It has been a busy period for the current account market with many banks launching headline grabbing deals, while others have been forced to slash interest rates and pull deals because of high demand.

In February, Tesco Bank announced a new account guaranteeing 3% interest until April 2019 on balances up to £3,000. It was forced to freeze applications shortly after launch due to demand, but reopened them in April with slightly stricter eligibility criteria.

TSB also launched a new deal in March, offering customers up to £10 cashback a month for day-to-day banking until June 2018.

However, towards the back end of last year, several banks reduced in-credit interest rates on their current accounts.

Santander was the first big name to cut rates on its popular 123 current account from 3% to 1.50% on balances up to £20,000.

Lloyds, TSB and Halifax also reduced the amount of interest paid on current accounts.

Some institutions have also cut back cash perks used to attract customers.

First Direct and Halifax both cut their cashback offer for new customers from £125 to £100, while switchers to M&S Bank now get a gift card worth £50 rather than £100.