From interest rates on linked savings accounts to cash deposits, incentives for switching have become popular. This week, NatWest became the latest bank to launch a cash bonus for customers – both new and existing – looking to switch current account.
“It’s a relatively easy process to switch current accounts now, which could be tempting with the financial rewards and benefits you might be offered,” he said.
“However, when you switch to new accounts, there might be a short-term dip to your credit score.”
So, how long could the bank move affect a credit score for?
According to Mr Webb, it could lower a credit score for around six months.
As such, the Consumer Affairs Expert warned people who were making applications such as for a mortgage in the near future to be “careful”.
He said: “It’s a good idea to not apply for more than two accounts every three months, and having new accounts showing on your credit report could also lower your score for about six months.
“So be careful if you’ve got any important applications on the horizon like a mortgage.”
Mr Webb added: “Before you apply for a new bank account it’s worth checking your credit report to see where you stand.
“You’ll improve your chances by making sure you’re registered on the electoral roll, and you haven’t applied for too many things in the last three months.”
Lenders like mature accounts
“When you open a new account it could lower your score for around six months. Lenders like to see mature accounts with a good payment history when you apply for credit.
“So constantly switching accounts every few months could reduce your chances of getting credit at the best rates in the future.
“You can also gain points on your Experian Credit Score for having accounts open for a long time.”
Pick the right time to switch
“Recent applications and brand-new accounts could lower your score for a few months, so make sure you’re switching at the right time.
“If you’ve got important applications coming up, like a mortgage or loan, you might want to avoid switching.
“A lower score could affect the decision and the interest rate, which could cost you money in the long run.”