Current account balances and current account switching – what’s the relationship?

Since the Current Account Switch Service was launched in 2013 the service has helped over seven million people and small businesses move to bank accounts that better suit their needs. The research we have done in the last eight years has helped us to understand why people switch and why some people don’t. 

Working with the Competition and Markets Authority during their review into retail banking led us to have a special focus on the groups of people who could benefit most from changing their bank account, but who are least likely to do so: those aged 18 to 24, the financially vulnerable and small businesses.

The other group who are likely to benefit most, and therefore required focus, were people with “High Credit Balances”, representing people with an average current account balance of over £15,000, seven percent of all current account customers[1].

People with this amount of money in their current account wouldn’t be on the top of everyone’s list of people who need help with their banking. However, understanding more about this group of current account holders and what their priorities are when choosing a current account helps us to complete the picture of how switching works.  We wanted to understand three things from our research:

• Do people with high credit balances consider switching?
• How does their awareness of the Current Account Switch Service compare with other people?
• Are there distinct features that make their behaviour different from other people considering switching and are these factors things we need to consider?

The first thing to highlight from our research is that to have a current account balance of over £15,000 you are more likely to have a higher annual income of over £55,000 and are more likely to own your home outright. Our research also showed that this group are more likely to be aged 55 or over and live in the South-East of England.

None of those things should be surprising and neither would the widespread view that this group of people are less likely to switch current accounts for a variety of reasons. For example, cash incentives are likely to be less tempting, they might have a longer relationship with their current provider and there might be less of an attraction to try new digital banking-only services offered by other banks or building societies.

Consideration of switching

However, our research shows that these high credit balance holders are just as likely to think about switching their account, with 17% thinking about switching compared to 16% overall.[2] And, they are just as likely to have switched their account and held their account for the same time as anyone else, on average. 

Looking more closely at the research results, the sub-group of current account holders who are, compared with the average, more actively considering switching are those with a current account balance of between £2,500 and £5,000, lower than those deemed to have ‘high credit balances’. One in four of these people – or 25% – a much higher percentage than the average – are considering switching.

But we cannot ignore the likelihood that people in this situation are more likely to be over 65, retired and receiving a private pension.

So, overall, having a high credit balance may not be the greatest influence on current account switching behaviour. Instead, factors like age and stage of life may be more pertinent.

Sentiment toward the Current Account Switch Service  

When it comes to awareness of the Current Account Switch Service and how highly people regard our switching service, high credit balance holder attitudes do not differ massively from anyone else.

Overall confidence in the Current Account Switch Service ranges between 85% and 88% and the research suggests that having a high credit balance places people at the upper end of this range (an 88% degree of confidence). In comparison, people with an average current account balance of £250 or less have a confidence score of 81% - a little lower than the average.

Again, we can see that these people’s background circumstances impact their views; broadly and on average, lower current account balances reflect a younger age profile. Forty percent of those responding to the research with a balance less than £250 are under 35.

This is a similar finding to our previous research that suggests these people are less confident in the service due to worries that switching their bank account may impact their overdraft. Yet many people do switch to new providers with an overdraft.

Those who are concerned should discuss their requirements for an overdraft facility with their new bank as part of the account opening process prior to the switch commencing. This is because an overdraft facility is subject to the lending criteria of the account provider, which in this case will be the new bank or building society the customer wishes to switch to.

Awareness of the Current Account Switch Service

The research suggests that people with high credit balances are slightly more likely to be aware of the Current Account Switch Service than others.

83% of people with high credit balances are aware of the service’s offering, compared to 77% of all current account holders. This demonstrates they are more likely to have seen advertisements featuring the service, use social media and recognised our activity and seen the Current Account Switch Service Trustmark in bank branches or on bank literature.

Given we know older consumers are more likely to be aware of the Current Account Switch Service from previous research, it makes sense that high balance respondents would have a greater awareness of the service.

This is reinforced by the fact that lower balance customers (with a balance of up to £250) are least aware of the service. It appears overall, though, that a lack of awareness of the service is not a barrier to considering switching.

Other potential barriers to switching

Analysing our audiences based on their current account balance has shown that having a high current account balance in itself does not massively impact switching habits and attitudes.

The combination of considering switching, sentiment towards the Current Account Switch Service and awareness of the service shows that it is younger account holders who are least aware of the service and think least positively about it.

It would appear the common factors that mean those with a high credit balance in their current account are less likely to consider switching are these: they are happy with their current arrangements and less persuaded by incentives because they are wealthier.

However, high credit balance holders still have a lot to gain from our service and a high credit balance does not mean that your current bank account provides you with all the services that you want. The current account market is changing rapidly and so are individual expectations.

People with higher credit balances should at least consider switching by looking at what is on offer in the current account market. While switching bank account is often associated with an immediate financial switching incentive, it does so much more. It enables you to switch to a bank whose services better suit your needs, be that customer service, mobile banking or interest rates.

Find out what you could gain from switching here. 

[1] Pay.UK High Balance Current Account CASS Research, October 2021. This number is based on the lower bound of the highest 5% of account values.[2] Pay.UK High Balance Current Account CASS Research, October 2021.