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Martin Lewis’ MSE issues warning about switching bank accounts


a composition of martin lewis and someone paying their bills

Martin Lewis’ latest MSE newsletter issues a warning to those applying for mortgages (Credit: Getty Images)

Martin Lewis’ Money Saving Experts have issued a warning about the potential pitfalls of frequently switching bank accounts.

The finance experts explained that, while banks offer some great incentives to switch, it can look ‘odd’ on your credit file in some instances.

If you’re planning to buy a house and apply for a mortgage, for example, MSE strongly advise sticking with your current bank. 

They explain that multiple bank applications will appear on your credit file and may suggest instability, which could in turn affect your ability to secure credit.

Instead, they recommend waiting for at least six months after your mortgage application before you enquire with a new bank.

Don’t worry if you’ve made a few switches in the past few years, though, as they reassure customers: ‘Done sensibly, it’s not usually a big deal’. It’s only when you make multiple applications in a short period of time that it ‘can look odd.’

While there are lots of incentives to switch, just be mindful of the timing (Credit: Getty Images)

Despite the caution, many people are understandably drawn to the allure of bank-switching cash bonuses, and often create second ‘burner’ accounts to earn free cash. 

Currently, four major banks – HSBC, Lloyd’s Bank, NatWest, and Royal Bank of Scotland – are offering new customers up to £220 in free cash for switching their current accounts.

MSE also advises that most serial switchers earn their bonuses over several years, so ‘see it as a marathon rather than a sprint.’

When considering a switch, other factors such as customer service and the availability of an overdraft should also be taken into account.

If you decide to proceed, the Current Account Switch Service (CASS) simplifies the process. CASS allows customers to pick a switch date, and the banks handle the transfer of any active direct debits to the new account.

So, while there are plenty of benefits to switching bank accounts, it’s crucial to consider the timing, especially when planning significant financial moves like applying for a mortgage. 

By managing the process wisely and understanding the long-term nature of earning switch bonuses, customers can make informed decisions without jeopardising their credit standing.

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Source:: Metro

      

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