Should I Swap Banks to get a Better Overdraft Rate?

Most banks will offer an overdraft with their current account. The rates that they charge for those overdrafts will vary wit many having an interest rate of between 35% and 40%. If you find a bank which has a lower overdraft rate than the one that you are with, then you might be tempted to switch to it as opposed to the one that you are with. However, there might be consequences in doing this and so it is a good idea to check it out thoroughly before you make the decision.

Interest Rates

The interest rates are probably something which is really obvious and you will focus on them. If you have a rate that is significantly higher than other places then you will be thinking about swapping to them. This is a good idea if you use your overdraft regularly. This is because your overdraft will be costing you a lot of money and if you can reduce the amount that you are spending then you will be able to pay it off more quickly and save money. Therefore it can be better to consider moving your account to one that has a lower rate if you use your overdraft a lot. If you never use your overdraft, then this will not be such an issue unless you feel that there might be a chance that you will need your overdraft at some point and then it could perhaps be useful to consider getting a cheaper one.

Other Features of the Current Account

Before you change though, you will need to think about the other benefits that you get for having this particular account. It could be that you pay some money for your current account and that means that you get all sorts of benefits for doing that. It could be worth thinking about whether that makes it better value for money despite the interest rates. You also need to think about other features that you might get as part of your account. Perhaps you get online banking, you have a local branch you can use, you can print statements on a machine in branch, you get higher interest on your savings account because you have a current account and things like this. It is good to think about what the worth of these things is as you might want to use them and if they are not available in the account you are considering switching to then you may decide that in the end it is not worth switching to them.

Bank

You may also be concerned with the reputation of the bank. It is a good idea to think about whether you are interested in this and what the bank is like. You will need to think about the features of a bank that might be important to you. For example, you might be concerned about whether they have a good reputation, whether people you know recommend them, whether you have heard of them, if you have used them before and things like this. There are lots of different possibilities that you might feel are important when you are choosing a bank and it is a good idea to think about what you feel is important to you. You may not worry about any of it, you may just have a few requirements or there might be lots of things that are really important to you. It is well worth considering this and then you will be able to put these factors together with what you want form the account and then compare the interest rates to see which account you think will give you the best value for money.

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