Interactive Investor

Are there drawbacks to switching banks?

15th January 2020 11:18

Andrew Hagger from interactive investor

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Q

I have recently switched my current account to Lloyds Bank. Does switching your current account affect your credit rating? Are there any negatives to switching?

From: KR/London

A

As part of the switching process, your new bank will carry out a search on your credit record. Although this search will show up on your credit record, it should not have any major impact on your credit rating.

If there are several searches carried out within a short timescale, that is when you may see a dip in your credit score. Frequent searches could be viewed as a sign you have financial issues and are constantly looking for more credit.

Switching should not cause you any problems, except perhaps a little inconvenience  – new bank details to give to your employer, new cards, PINs and online banking to get used to – but nothing to worry about, especially if it means you get a bank account that is more suitable for your needs.

Andrew Haggar is the founder of personal finance website Moneycomms.co.uk

Best current accounts

Best account for…

Account

Benefit

Notes

Switching perks

HSBC Advance

Get £175 if you switch and open a linked 2.75% regular savings account

You must pay in £1,750 a month

Interest

Nationwide FlexDirect

5% interest on up to £2,500 for the first 12 months

Must pay in £1,000 a month

Overdraft

First Direct

Interest-free £250 overdraft

 

Cashback

NatWest Reward

2% cashback on bills and £150 switching reward

£2 monthly fees and must pay in £1,500 a month

 

This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.

These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.

Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.

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