247 lines
7.8 KiB
Plaintext
Executable File
247 lines
7.8 KiB
Plaintext
Executable File
finance
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personalfinance
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consumertips
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8428184
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-----
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# Breaking up with your bank doesn't have to end in tears
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## It is getting easier and quicker to move accounts to get a better deal.
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![Banks await final rules on capital][1]
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It is getting easier and quicker to move accounts to get a better deal.
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[![Rosie Murray-West][2]][3]
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By [Rosie Murray-West][4] 6:15AM BST 05 Apr 2011
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[Comments][5]
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These accounts have the highest ongoing interest-free overdrafts from free in-
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credit current accounts. Most require you to pay in a certain amount every
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month, so check the small print.
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There's an oft-quoted statistic among British banks that people are three
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times more likely to get divorced than to change current accounts. Whether
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that is true or not, it is certainly the case that many of us find that
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breaking up is hard to do when it comes to switching all of our direct debits
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and hard-learnt account numbers and PINs to another provider.
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MPs have just noticed this too. The Treasury Select Committee published a
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report over the weekend complaining that customers are being ripped off by the
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big banks, and are finding it too difficult to switch their accounts to
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rivals.
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Andrew Tyrie, the irate committee chairman, also had a pop at the banks'
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claims to offer free banking. "So-called free banking is not free because
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customers pay charges, such as overdraft fees, or lose interest due to poor
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rates."
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Despite our inertia, statistics show that many of us are unhappy with our
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banks. Complaints about them are running at almost 10,000 a day according to
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the Financial Services Authority. Mr Tyrie, Conservative MP for Chichester,
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said that he "received much evidence about low levels of consumer satisfaction
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and poor treatment of consumers by the major banks".
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## Related Articles
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* [Free banking 'is not free'][6]
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02 Apr 2011
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* [Bet on Barclays bouncing you off its best buy Isa][7]
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03 Apr 2011
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* [Barclays tops complaints list][8]
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30 Mar 2011
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Now for the good news. David Black, of financial statisticians Defaqto, says
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that it is a great time to change bank accounts. "There are lots of pretty
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impressive introductory offers out there at the moment, and people can really
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do well out of switching. However, you need to pick the right account for
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you."
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### Make a start
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The first step is to assess what your current provider is doing for you, and
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whether it suits your needs. Your lifestyle and the way you manage your
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finances should determine which type of account is right for you.
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The most important thing to work out is whether you are predominantly in
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credit or debit. If you usually spend your whole salary and often go
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overdrawn, concentrate on what you are paying out in interest and overdraft
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charges. If you are always in credit, take advantage of accounts that reward
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you for it. Over half of current accounts do not pay any interest, including
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ones from some of the big players such as Barclays and Nationwide.
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But beware: many of the accounts with the highest interest rates have the most
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punitive fees if you slip into your overdraft.
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### If you are often in credit
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There are several accounts that pay attractive rates of interest. Most require
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you to pay in £1,000 every month - to ensure that you use it as your main
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current account and put your salary into it. These include Halifax's Reward,
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which will pay £5 every month net of basic-rate tax provided that you pay in
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this amount.
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Santander's Preferred Credit Account pays 5 per cent interest on balances up
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to £2,500. After these two market-leading products, the rate drops
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dramatically, to 2 per cent for Lloyds' Vantage Classic account or 1.1 per
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cent for Coventry Building Society's Coventry First account.
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### If you are often overdrawn
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It can be difficult to compare overdraft charges, because different banks will
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charge you in different ways. Sarah Brooks, head of financial services at the
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government watchdog Consumer Focus, said that banks are offering
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''overcomplex'' products with "unfair and hidden charges".
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Some banks charge a flat rate for every day that customers go overdrawn, while
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others use an interest rate system.
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Those who go into their overdrafts by a tiny amount, by accident, are more
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likely to be penalised by a flat-rate system. "It can be very difficult for
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people to compare overdraft charges," Mr Black said.
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The box below shows some of the accounts that have free overdraft "buffers"
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which are useful if you sometimes slip into the red. If the problem is more
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persistent and the charges rack up, you need to seek more specific help. It is
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possible to get a basic bank account that does not allow you to go overdrawn,
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or an account from a local credit union. For free debt advice try the Consumer
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Credit Counselling Service (CCCS) on 0800 138 1111.
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To get more information on current account charges visit
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[www.moneysupermarket.com][9] or [www.moneyfacts.co.uk][10].
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### The switching process
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Many banks offer a ''switching service'' if you want to move your current
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account to them. This offers to transfer all your direct debits. However, the
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select committee said that there was still a "significant risk" of such
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payments going astray, which can act as a disincentive for many.
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However, banks and building societies are striving to improve this process,
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and the average time it takes to switch accounts is about eight weeks if you
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do it yourself and less if the bank does it for you.
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Generally you need to go to your new bank and say you want to switch accounts.
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You will need the name of your old bank, account details, and proof of
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identity and address. Check that the bank you are moving to will offer an
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interest-free overdraft while the process is going on, so that you aren't
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charged for direct debits or standing orders that go through before money is
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paid into the new account.
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Some banks even have incentives to use their switching service. Santander is
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offering £100 for people to move to its current account, which pays high rates
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of interest.
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It is often up to you to tell your employer you are changing accounts and
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provide them with your new account number and sort code, so check with your
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old and new bank if you need to do this. It may be sensible to keep some money
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in your old account for a little while, just in case any problems occur.
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[What are these?][12]
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* Share: [Share][11] [ ][13] [ ][14]
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[Tweet][15]
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http://www.telegraph.co.uk/finance/personalfinance/consumertips/8428184
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/Breaking-up-with-your-bank-doesnt-have-to-end-in-tears.html
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Telegraph
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## [Consumer Tips][16]
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* ### [Finance »][17]
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* ### [Personal Finance »][18]
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* ### [Banking »][19]
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* ### [Rosie Murray-West »][3]
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[![pensions-calculator][20]][21]
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### [Pensions Calculator][21]
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[![currency exchange][22]][23]
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### [International Money Transfer Service][23]
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[![find an independent financial advisor][24]][25]
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### [Find an Independent financial adviser][25]
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Related Partners
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* [10 ways to keep your ID safe][26]
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* [Save money on your international currency transfers][27]
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In finance
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[![][28]][29]
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### [Don't follow the herd][29]
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[![Cartoon of Sherlock Holmes and Doctor Watson investigating a tax code][30]
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][31]
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### [10 ways to beat the taxman][31]
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[![Cartoon of couple planning pension][32]][33]
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### [Pension countdown][33]
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[X][11] Share & bookmark
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Delicious Facebook Google Messenger Reddit Twitter
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Digg Fark LinkedIn Google Buzz StumbleUpon Y! Buzz
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[What are these?][12]
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Share:
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* [ ][11]
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* [ ][13]
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* [ ][14]
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* [Tweet][15]
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* Advertisement
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![][34]
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telegraphuk
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Please enable JavaScript to view the [comments powered by Disqus.][35] [blog
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comments powered by Disqus][36]
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Advertisement
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[Telegraph Offers »][37]
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* [Finance][38]
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* [Investing][39]
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* [Retirement][40]
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