YourMoney.com Mailbag: Can I switch current account if I’m in my overdraft?
The 7-day switching service, which launched in 2013, means switching current account provider has never been easier.
The service ensures all of your payments, both ingoing and outgoing, are moved to your new bank within seven days rather than the previous 18-30 working days.
If you’ve gone into your overdraft, you can still switch. However, industry experts say it is much easier to switch if you’re in the black.
Jody Baker, head of money at comparethemarket.com, writes: “It’s a good idea to try and clear any overdrafts before moving to a new banking provider.
“However, if this is not possible, when opening your new bank account, you need to be clear on the overdraft facilities provided by your new bank.
“If your new bank will provide you with an overdraft for the amount you need, then you can switch via the normal switching service. If it won’t, then you will need to pay off your overdraft before moving your account.
So, if you have an overdraft of £2,000 and your new provider will only give you a limit of £1,500, you’ll run into difficulties when switching.
Baker added: “It is quite a tricky position to be in as if you’re overdrawn, you won’t really know if you can get the bank account before you actually start going down the account opening process but where possible, clear any overdrafts before switching. Some bank accounts offer incentives to switch, so it is worthwhile exploring your options.”
The benefits of switching
The Competition and Market Authority (CMA) is mid-way through an investigation into the UK current account market.
Its initial findings revealed that customers could save £70 a year by switching to the cheapest provider, while overdraft users could save £140 a year and heavy overdraft users could save on average £260 a year.
Click here for more information on the 7-day switching service.