Reality Check: Could you save £92 by switching bank account?

Quote from CMA: The average gain from switching for these customers to one of the five cheapest products is around £92 per year.

The claim: The average current account holder could save £92 a year, rounded to £8 a month, by switching current account provider.

Reality Check verdict: The savings are for an average customer. It is likely that the savings available will be greater if you make more use of overdraft facilities and if you bank with one of the banks that have the biggest market share in current accounts.

Tuesday's report from the Competition and Markets Authority (CMA) said that the average customer with a standard account could save £92 by switching current accounts.

Are you an average customer? It depends largely on whether you use overdraft facilities, whether you tend to keep a balance in your current account and how good an account you are currently using.

The CMA report looked at data from thousands of customers.

But with 75% of UK current accounts provided free if you have money in your account and do not go overdrawn, where is that saving coming from?

So, looking at a comparison with the five cheapest accounts available, an average British customer spending between one and three days a month overdrawn could save about £6 a month by switching, while someone spending four to seven days a month overdrawn could save £11.

There are smaller savings to be made if you tend to be in credit, with the "savings" the result of interest you could have earned with other accounts.

If you are always in credit by up to £500, then you can only save £3 a month, while even someone usually having between £10,000 and £20,000 in their accounts would save only the average £8 a month by switching.

The CMA did find out what proportion of customers in its research fell into each category, but it redacted this information for British customers in the final report.

It did give the proportions for Northern Ireland though, with 22% of customers being overdrawn one to three days a month, 18% staying in credit by up to £500 and 21% keeping between £500 and £2,000 in their current accounts. All other proportions were in single figures.

Also, clearly, if you already have one of the best available accounts, then the savings available will be smaller.

The CMA found that the bigger savings were available to people who currently had their current account with one of the banks with the biggest shares of the market.

The report refers to the "big five" in current accounts as@

  • Barclays
  • HSBC
  • Lloyds Banking Group
  • RBS
  • Santander

The figures are for the average annual savings expected in the fifth year after switching, with any switching incentives divided over that period.

There are considerably bigger savings to be made with accounts that charge monthly fees but offer additional products such as travel insurance or phone insurance, but that assumes you want the services on offer.

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