Bank Switching

What is bank switching?

Bank switching is simply moving money from one bank account to another using the current account switch service (https://www.currentaccountswitch.co.uk/). When done correctly, you can pocket upwards of £1000 for a few hours of ‘work’. 

A Word of Caution for Credit Seekers: Each switch hurts your credit score because it appears (even if you don’t open overdrafts) as a credit account with low average age. Avoid bank switching within 6 months of applying for a mortgage. 

Step 1: Establish a "Burner" Bank Account

Before you initiate any bank switch, it's wise to create a separate "burner" bank account. This account will act as your primary tool for taking advantage of switching offers while keeping your main account untouched to avoid any disruptions in your salary payments or direct debits. Starling or Monzo accounts are great candidates for this as they are easy to open. If you opt for another bank, ensure that you don't inadvertently waste a switching offer by opening an account with an existing active promotion. Additionally, preserving your oldest account can help minimize the impact on your credit score.

Note: If you're using an account that already has direct debits, you can skip this step.

Step 2: Set Up Two Direct Debits

Once your new account is up and running, you'll need to establish two direct debits from it. Switching utilities or phone bills can be inconvenient, and subscriptions such as Netflix or Amazon Prime don't qualify as they are considered recurring payments. To get around this, you can set up two £1 direct debits at https://www.onepounddd.com/.

Step 3: Find the Best Switching Offers

To find the current switching offers, head over to https://www.moneysavingexpert.com/banking/compare-best-bank-accounts/#switch.  These offers change frequently, so it's a good practice to check for new offers every so often.

Step 4: Initiate the Switch    

Once you've selected the offer that suits you best, you can initiate the switch either through the bank's website or by downloading their mobile app. During the account creation process, be sure to select yes when asked if you wish to switch, and then follow the provided instructions. The switching process typically takes about a week to complete, and you'll still have access to your old account during this period. Keep in mind that some offers may have minimum pay-in requirements, such as £1000, but you can usually withdraw this amount right after the switch is completed.

Step 5: Repeat and Optimize

When the bonus from the switching offer lands in your account, you're all set to take advantage of another switching opportunity. Simply repeat the steps outlined above. If you're eager to expedite the process, consider opening several burner accounts to facilitate multiple switches simultaneously.

To help you stay organized, it's recommended to maintain a spreadsheet to track the progress of your switching endeavours.

Now, armed with these tips and tricks, you can harness the potential of bank switching to bolster your financial standing. Happy banking!