What do I need to do to switch banks? Martin Lewis warns savers ‘be prepared to switch banks’

M

artin Lewis has warned savers that they should be prepared to switch banks if the new “top rate is crap”, after Bank of England hiked UK interest rates by 0.5 per cent.

A rate rise is generally good news for savers, especially after a long stretch of getting very low rates on their money, but some banks will be less likely to pass the new interest rates on to savers, warned the founder of MoneySavingExpert.com

By changing, you may be able to take advantage of additional benefits offered by your existing account, such as switching incentives, higher interest rates, fewer overdraft fees, or more perks.

The process of changing bank accounts is relatively simple, thanks to an agreement between banks and building societies to make the process quick and seamless.

Steps to switching banks

On Twitter, Lewis advised savers to “wait a day or two for the new rate to be factored in, then check your savings and, if it is crap, ditch, and switch”.

Once you’ve identified the interest rate on your savings account isn’t increasing, find a savings account with the highest interest rate.

Lewis has a list of savings accounts with high-interest rates you can choose from on MoneySavingExpert.com. The list is updated on a regular basis by the money team.

Before committing yourself to a new account, make sure to check its terms. These are the common things to look out for, including “bonus rates” that are reduced after a certain time, minimum initial deposits, instant-access accounts that have restrictions on the number of withdrawals you can make, and being unable to deposit or withdraw money for certain terms.

Once you qualify and successfully open your new account, it’s time to transfer the funds from your old account.

How to transfer to a new savings account

If you’re transferring a savings account, you’ll need to check what your options are with your current provider.

Providers don’t always allow a BACS transfer straight to your new account. It may be possible you need to initiate a Direct Debit from your old account.

If you’re transferring an Isa, there’s only one way to do it – fill in a transfer form with your new Isa provider.

Many providers let you complete this online.

Once you’ve sent off the form, your new provider will get in touch with your old provider to make the arrangements.

Always keep an eye on the interest rate on your account to make sure it stays competitive.

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