Customer surveys again reveal the yawning gap between the best and worst current and savings account providers – yet many people seem apathetic about ditching mediocre banks, reports Which? Money.
In August 2022, we asked thousands of customers about their experiences of using building societies and banks. We found that 60% of the people we surveyed about their current accounts said they had been with the same provider for more than 10 years. That’s despite 28% of people overall saying they liked ‘nothing’ about their account.
It doesn’t have to be that way. At a time when household finances are under strain, you don’t need to accept substandard service or pitiful interest rates.
Choosing a provider with superior customer service forces the rest to improve, and switching your current or savings account provider is quick, simple and effective.
Banks aren’t all the same
A common perception is that there’s no point in switching – people often tell us that ‘all banks are the same'. But our surveys reveal there is in fact a big difference between the best and worst, with the same brands lagging behind the best, year after year.
This year, digital banks Starling and Zopa top our tables for current accounts and savings respectively, each earning five stars for every aspect of their services we could rate. Both have been named Which? Recommended Providers.
Meanwhile, many high-street banks continue to underwhelm.
TSB came near the bottom of our table for both current and savings accounts. Savers gave it just one star for branch service, and two for customer service.
Other big banks HSBC and Royal Bank of Scotland also failed to impress in many areas, getting more than their share of average or below-average ratings, although both scored decently for their mobile apps.
Read on to discover the rest of the providers that could make switching worth it.
Which? Recommended Providers for banking
Starling Bank
Customer score: 90%; product score: 78%
Highlight: Debit card is free to use abroad
Access: App, online, telephone
Starling has clinched the top spot for the second year running. It achieved one of the highest customer scores we’ve awarded for current accounts, with five stars for every part of its service we could rate.
Many customers praised how easy its app is to use, as well as features such as 'Spaces', which rounds up your spending to the nearest pound and pops the spare change into a virtual piggy bank.
It’s also the cheapest bank we’ve reviewed for spending abroad and overdrafts, which can be as low as 15% depending on your credit score. It only pays 0.05% on credit balances, though, so don’t use it for long-term saving.
First Direct
Customer score: 88%; product score: 80%
Highlight: Interest-free £250 overdraft
Access: App, online, telephone
First Direct has the second-highest customer score and, like Starling, received five stars across the board.
Its current account has an interest-free overdraft buffer of £250, but beyond this an overdraft is very expensive at 39.9%.
First Direct performed best out of 11 banks in a Which? Investigation into fraud helpline waiting times, taking just 16 seconds, on average, to answer the phone.
The bank is currently trying to woo prospective customers with a generous switching incentive of £175.
First Direct is a division of HSBC. If you have accounts with both, limit deposits to below £85,000 across both brands so your money is fully covered by the Financial Services Compensation Scheme.
- Best and worst banks: customer scores and star ratings for all major current account providers
Which? Recommended Providers for savings
Zopa
Customer score: 85%; product score: 72%
Highlight: Best easy-access account pays 2.15%
Access: App, online
Former peer-to-peer lender Zopa received a full banking licence in 2020. Its Smart Saver account has been in our top 10 best-rate easy-access accounts since its launch earlier this year. It currently pays 2.15%, boosted to 2.55% if you can give 95 days' notice for withdrawals.
Fixed-rate accounts are operated online, and its easy-access account is operated via its mobile app.
Zopa gets five-star ratings on both its app and online banking service.
Skipton Building Society
Customer score: 82%; product score: 78%
Highlight: Best easy-access account pays 1.9% AER
Access: Branch, app, online, telephone
Savers gave Skipton five stars for its overall customer service and four stars for its service in branches, online and via its mobile app.
Unlike many other providers, you won’t be penalised with a lower interest rate if you opt for a branch-based account (it has 88 branches).
It also offers a wider range of savings accounts than our other recommended providers, including a flexible cash Isa paying 2.1% AER, as well as a stocks and shares Isa.
Marcus by Goldman Sachs
Customer score: 82%; product score: 75%
Highlight: Best easy-access account pays 2% AER
Access: App, online, telephone
Digital bank Marcus launched in the UK in 2018 with market-leading savings rates, and has helped drive competition in the market ever since.
It pays 2% AER on its easy-access account, including a 0.25% bonus fixed for 12 months (this is also available as an Isa), and 2.7% AER if you fix for one year.
It received five stars for its online banking service. You can also manage your savings using the mobile app.
- Best and worst savings providers: customer scores and star ratings for all major savings providers
Is the digital revolution leaving people behind?
Skipton Building Society is the only Which? Recommended Provider for banking or savings with a national branch network, although Starling and First Direct customers can use a local Post Office for basic banking services. First Direct customers can also use branches of HSBC.
There is a risk that customers who don’t manage their finances on a smartphone will miss out on the best banking options and become increasingly disadvantaged.
A separate Which? survey of 2,000 people in September 2022 found that 27% of adults hadn’t used an app to manage their current accounts in the past year, typically because they prefer online banking (45%), or have concerns about mobile security (37%).
Others lack confidence using the technology (22%), have unsuitable phones (19%), find the screen or buttons on a phone too small (16%), or have a disability that makes mobile banking difficult (3%).
Even those comfortable using apps often prefer the flexibility of choosing how they bank. For example, 66% of current account holders said access to a branch is important and 44% said they’d visited one in the past year.
'Pick and mix' banking
A desire for flexibility may be behind people moving away from banking with a single provider and towards a ‘pick and mix’ approach. Some 30% of our survey respondents said they have two current accounts; 18% have three or more. Using multiple providers can give you more of what you need, whether that’s a local branch, secure systems, preferential rates or budgeting features.
A second current account also ensures access to money if your main bank has technical problems. But with digital banking becoming increasingly prevalent and branches closing at an alarming rate, we worry that many people could be left behind.
We welcome the government’s pledge earlier this year to bring forward the Financial Services and Markets Bill. It will introduce measures to protect people’s ability to withdraw cash.
- Find out more: is your local bank branch closing?
source https://www.which.co.uk/news/article/best-and-worst-banks-and-savings-providers-app-based-banks-top-which-rankings-agtYh4r7K1h8