Thursday 19 October 2017

Loyalty won't pay in current account

Bank of Ireland HQ, Baggot Street Lower, Dublin 2
Bank of Ireland HQ, Baggot Street Lower, Dublin 2

Banks rely on apathy - that of their customers. They know most Irish people still bank with the first institution they ever opened an account with. They know if they get your Communion money they probably have you for life.

They also know that the place where you have your current account is also the most likely place you'll go shopping for big ticket loans, like mortgages. They know that most of us believe switching from one bank to another is messy, long-winded and expensive. So here's the good news: banks only make money in two ways - lending it out, or charging to mind it.

Switching makes sense as the customer has control. New lending is still ferociously restricted and the Central Bank rules on deposit requirements won't help one bit.

So, all the bait-and-switch campaigns run by banks centre around switcher business (sometimes with financial incentives) to move mortgages, savings and current accounts.

SWITCHING YOUR CURRENT ACCOUNT

Banking can't be free. It costs money to run branches, manage ATM machines and process laborious paperwork. During the Celtic Tiger, they were falling over themselves to get new business and 'free' banking was an incentive everyone latched onto. Now, they're re-introducing charges and nobody likes paying them.

Fees are charged in two ways: a quarterly/monthly set amount and/or a charge every time you make a transaction. Some, notably Bank of Ireland, charge both. You can qualify for free banking if you are prepared to jump through a few hoops.

Many insist you maintain a big balance in your current account, but who can afford that? PTSB have the best deal: just lodge €1,500 to your account and there are no charges. Ulster bank charges €4 a month, but nothing else. So, it's definitely worth looking around. The Central Bank's Code of Conduct insists that a bank must have a new account up and running in 10 working days. Let your old bank know and get a refund of Stamp Duty for any unused cheques.

They must assist you in moving direct debits/standing orders in a timely fashion.

How to switch banks

Step 1

Pick a new provider.and ask for a 'Switching Pack'. Agree a 'Switching Date' - when there is least activity on your account, e.g. mid-month.

Step 2

Inform your employer of the new details.

Step 3

If you have an existing overdraft you'll need to negotiate its terms with your new bank. You are not automatically entitled to move it also. The new bank may carry out a credit check.

Step 4

Provide your new bank with proof of identity and confirm whether you need a cheque book, debit card etc.

Step 5

Complete an 'Account Transfer Form'. This tells your new bank about direct debits, standing orders etc which they will liaise with your old bank to switch across. The balance of funds in your old account will also be moved. Your new account will be up and running within 10 days of the 'Switching Date' you selected.

Potential saving: up to €50 per year

Total time: 150 mins

Irish Independent

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