Overdrawn? Don’t let fear of rejection stop you switching current account
Research from price comparison site uSwitch has found that two thirds of current account holders (of 2,000 surveyed) are unsure about whether they can switch current account if they’re overdrawn.
If you are in an arranged or unarranged overdraft, you can still switch current accounts, though it’s not always possible to find out if you’ll be offered an overdraft facility with the new account before you make the move.
Instead, each provider will have different terms when it comes to offering overdrafts to new customers.
This lack of clarity has left one in seven current account holders high and dry with a lower arranged overdraft limit than they might otherwise access, uSwitch said.
With seven out of 10 UK current account customers having access to an arranged overdraft and with an average overdrawn amount of £266 every month, lower limits can have severe consequences for those regularly using their overdrafts.
The Competition and Markets Authority (CMA) has already said that overdraft users are less likely to switch account than other customers and that the heaviest overdraft users stand to save up to £260 a year by switching to a different provider.
So uSwitch is calling on Bacs to ensure the Current Account Switch Service (CASS) gives customers clear information about their arranged overdraft before they commit to switching.
Tashema Jackson, money expert at uSwitch.com, said: “Millions rely on their overdraft every month just to make ends meet. Yet they’re not only being stung by high charges and fees, but many also feel like they’re not eligible to switch to a better deal. With some accounts charging nearly three times more than others for an arranged overdraft, customers should be able to simply compare all the options so they’re not paying over the odds.
“While the CMA has said it will take a tough stance on capping unarranged overdraft fees, it’s doing little to help overdraft prisoners who feel trapped and unable to switch. We’re calling on the banks to assure people that if they do switch their current account, they won’t be left high and dry by an overdraft that doesn’t meet their needs.”
A Bacs spokesperson said: “We already have this in hand. As the owner of CASS, Bacs is working with banking providers to deliver harmonised account opening procedures across the industry, and this will include confirmation of overdraft approval, as well as the amount and terms of the overdraft.”
Here’s a table comparing current account overdraft charges: