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People with overdrafts can switch bank accounts


Many people with an overdraft on their current account believe they are unable to switch their account to a different provider, The UKs competition authority has found.

Customers with an overdraft don’t think to look around for a better deal, as they mistakenly believe they are locked out of switching their current account. Many high street banks are happy to accept new customers, even if they are overdrawn.

The research was conducted as part of an ongoing campaign to encourage further competition between UK banks. It showed that 85% of people who have been overdrawn for nine months or more had not switched their current account or even looked around for a better deal. This was partly to do with the fact that customers thought they would be unable to change provider as other banks would not take them on.

There are no regulations that prevent people from switching when they have an overdraft. Some banks or building societies might turn down an application, some might require the overdraft to be paid off but others might agree to take on the debt.

The switch gaurentee means that all current account holder can now switch their bank to another provider within seven working days, including transferring all direct debits and standing orders.

A spokesman for the British Bankers' Association, which represents the UK's High Street banks, said: "All the banks have been working with the CMA as part of this ongoing inquiry. [This] statement takes a positive of view of recent innovations in retail banking and shows that more than 90% of current account customers are satisfied."

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