So… I have a confession to make. I’ve used the same bank since I opened my first account when I was nine – for no better reason than because my parents’ had an account with it at the time.
I’ve been thinking of switching for a while, but now NatWest has served up an extra reason to get cracking. From July, it is introducing a ‘usage fee’ each month for authorised overdrafts. The £6 charge means that those who go more than £10 into the red every month will pay £72 a year, on top of the 19.89% equivalent annual rate (EAR) interest.
At the same time, NatWest is reducing the maximum amount it will charge each month for use of unauthorised overdrafts from £186 to £90. While this is good news for those who use unauthorised overdrafts, the bank is essentially penalising people who use their overdraft responsibly.
I don’t use my overdraft every month, but I do dip into it occasionally, thus qualifying myself for this disproportionate penalty.
Switching banks for the first time
So I’ve decided that I’m going to switch current account for the first time – to First Direct, a Which? Recommended Provider. It will give me a £250 interest-free overdraft with no charge, plus £100 for switching.
Of course, switching isn’t as easy as it could be. It is about to get simpler though, with a new switching guarantee to be brought in by the Payments Council in September 2013. This will allow you to move your money to a new home in just seven working days. However, we’d still like to see the introduction of portable account numbers, which would let you take your account numbers from bank to bank.
The message we need to send the banks is that they can’t rely on us staying with them out of habit or misplaced loyalty. With money as tight as it is at the moment, people are getting quick to notice when a bum deal is dressed up like a positive change – and they’ll vote with their feet rather than sticking with the status quo.