Customers choosing bargains over bank loyalty

29 January 2004
The number of people planning to change banks over the next two years looks set to double, analysts predict.

A survey by market analyst Mintel found that 13 per cent of people planned to switch their bank account to a new provider during the coming two years, compared with just seven per cent who thought they would switch banks during the same period in 2002.

Around 21 per cent of people said they would move in order to get paid a higher interest rate, while 20 per cent were looking for better service.

"Today higher interest rates are most likely to persuade people to change banks, as more and more people become rate chasers", Mintel's Paul Davies said.

The group estimates that there were around 70.5 million current accounts in the UK in 2003 and Mintel predicts this will rise to around 71.6 million this year and up to 74 million by 2007.

The survey showed that at the end of 2003 around 28 per cent of current accounts were accessible by telephone and 24 per cent by internet.

The main reason people gave for choosing a particular bank was an interest-free overdraft (37 per cent), followed by the reputation of a bank or building society was considered important (32 per cent) and no charges for going over the overdraft limit (27 per cent).

"Price wars between banks have now developed in the form of lowest interest rates for authorised and unauthorised overdrafts", Mr Davies said. "That is in line with the debt culture that is now so prevalent in the UK today."