Money Saving Expert founder Martin Lewis has sounded the alarm for those keen on hopping from one bank to another, pointing out that it could have an impact on your credit score. Nationwide, NatWest, Lloyd's, Santander, and First Direct are tempting new customers with free cash incentives before Christmas, offering windfalls ranging from around £150 to over £200 - a potential welcome boost for the festive season.
The financial guru, known for his savvy advice, stressed that serial switching can do more harm than good – especially at popular banks like Santander, Nationwide, and NatWest, where tempting cash incentives to move banks are on offer.
He explained, "If you do one switch, it's an application on your credit file which has a very minor, short-term negative effect." But he warned that doing this multiple times can lead to trouble: "Lots of those in a short space of time can be an impact. Banks also like to see evidence of longevity, so that's also slightly negative."
The founder of Money Saving Expert (MSE), Mr Lewis, also advised prudence if set to buy a house in the near future: "So I wouldn't switch my bank account if I had a mortgage application during the next two months."
Doubling down on his cautionary tone, he added: "Switching very regularly to make money can have a bigger impact. If you're rejected, it could be for one of many reasons, for example... you've got a poor credit record, you've had past dealings with that bank where you've missed payments or the bank doesn't think you'll be a profitable customer."
Money-saving maestro Mr Lewis hammered home the message: "Don't assume because one bank doesn't want you, none of the others will. All the same, don't just apply everywhere as it can do more damage to your credit record."
He further advised, "Instead, you need to do two things – first, ask the bank why it rejected you. Its answer may be vague, but it should tell you if you were rejected because of your credit record."