Martin Lewis has issued a warning to anyone thinking of switching their bank account to take advantage of an introductory offer. Many high street banks are offering sweetener deals to encourage people to change to them - with as much as £200 in cash available in some cases.
However, while the Money Saving Expert founder advocates people take advantage of these deals, he also warns that it could impact a person’s credit rating. This means that if someone is building up to a big balance transfer - for example, a mortgage - then it’s probably best not to switch in the three months before.
Appearing on Good Morning Britain today (April 19), Mr Lewis was taking questions from viewers - and co-host Susanna Reid read out one. She asked: “Sarah has emailed to say she’s looking at switching her bank account due to the cash incentive offered. But her qualifying bank is the one that she’s had since she was a child and has been opened for more than 18 years.
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“If she closes this account, will it affect her credit rating, which is currently good?” Mr Lewis replied: “You don’t have a credit rating. You are credit scored individually by each firm. But evidence of longevity of a bank account tends to be good for your credit scoring.
“What I would say is, it’s very trivial switching bank, and the benefits are good, so do it. But if you’re within three months from a major credit application such as re-mortgaging, that’s bad timing, right? Don’t do it in the three months in a run up to or a big balance transfer, but otherwise get on and do it.”
He also took the time to run through some of the best deals currently available. He said HSBC has just launched a free £200 and it also has a five per cent linked regular savings account.
He added: “You’ve got NatWest and RBS Rewards sister banks that also give you a free £200 for switches you need to use their switching services. There will be a credit check for this and check the eligibility terms.
“There are various different ones. I haven’t got time to run through them all. It also gives you £3 a month cash back. What it actually does is it charges you £2 a month, and it gives you £5 a month. So that’s a net £3 a month, £36 a year as long as you’re using its app and you’ve got enough direct debits going out and a six per cent linked regular saver, and then you’ve got First Direct.
“The other one that pays pays slightly less than 175 quid. But that has come top or near top of every customer service poll I’ve ever done. Rated 90 per cent great in the last one.
"It’s got a seven per cent linked regular saver and a zero per cent overdraft, up to 250 quid. So if service is what counts for you, that is probably the winner. If money is what counts for you, it’s one of the other two.”
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