The Salary Calculator

Choosing the right bank for you

by Madaline Dunn

Whether you’re opening a bank account for the first time, heading off to university or just looking to switch things up, when it comes to choosing the right bank for you, there’s a lot to weigh up.

At The Salary Calculator, we’ll guide you through the process. In this week’s article, we’ll explore:

• Reasons to switch banks
• Banks’ ESG and CSR considerations
• Which banks offer the best digital services
• How to make the switch

Why you might be thinking of changing banks

According to recent statistics, the number of people with current accounts switching banks has surged as of late, increasing by more than 70% in the first three months of 2023. In fact, 341,075 switches occurred between January and March 2023. So, why are so many choosing to switch banks? Well, reasons vary. Many are looking for better deals, stronger customer service, sign-on bonuses, and increasingly more environmentally and socially conscious organisations.

According to a survey conducted by MoneySuperMarket, one of the main reasons people switch is to access higher interest; the survey showed that 41% of customers made the change to boost savings. Following behind this were cashback and benefits (20%), overdrafts (14%), and finally, customer service (5%).

Of course, there are also some people to whom switching banks hasn’t occurred to and those who don’t know that there are alternative routes to take. Indeed, a Frost Bank survey found that only 11% felt a sense of ‘financial belonging’ with their current banks, and yet, nearly half (44%) said they wouldn’t change banks. So, let’s break that down.

The ESG and CSR considerations

There’s no denying that conscious consumers are on the rise. Never before have so many people put so much thought into how their purchasing decisions affect others, animals and the planet. This extends to where people house their money, too, with more and more people waking up to the reality of how banks operate.

Research shows that these days, 82% of consumers want a brand’s views to align with their own, 76% won’t give their money to those brands that don’t, and a quarter of people having a zero-tolerance policy for ‘unethical behaviour.’ Further to this, recent data has revealed that 75% of banking customers now want more information about their bank’s carbon impact; 48% want a bank that helps them in making more environmentally-friendly purchasing decisions.

Barclays has been found to be one of the largest investors in fossil fuels, investing over $144.9 billion in fossil fuels in 2020. Triodos, on the other hand, has been identified as one of the leading banks for lower carbon emissions, as have Monzo and Starling. Indeed, research from MotherTree found that moving £5,767 from Barclays to Triodos can cut your carbon footprint by a massive 1.7 tonnes per year!

Digital banks with features that give them an edge

While banking is becoming more and more digitalised, not every bank is on the same level just yet. These days the majority of apps offer basic digital services, but some are still catching up when it comes to smartphone apps, digital wallets, personal financial planning, security notifications and face and voice biometrics.

Some of the top digital banks include Revolut, which provides smart budgeting tools, with built-in analytical tools. Monzo is another, which equips customers with real-time notifications, virtual cards, spending budgets and saving pots. Starling similarly gives customers spending insights and assists with savings goals.

Of course, this all comes down to preference and you may prefer brick-and-mortar banks, although, as we’ll discuss in our next section, these days, they’re few and far between.

Branch locations

Digital features might add a bit of pizazz to your banking experience, but maybe you prefer dealing with your finances face-to-face. Indeed, a third of Brits still prefer to do banking in person. In this case, it’s likely your switch will be informed by the proximity of your closest bank.

Interestingly, it’s not just older customers who prefer to visit a branch; although 44% do choose in-person interaction, a fifth of 18-34-year-olds also prefer to do all their banking in person.

Unfortunately, despite this preference, bank branches are dropping like flies. The recent figures show that 5,162 bank and building society branches have closed since January 2015. Further, according to Which? an additional 206 branches are set to close by the end of the year. So, this may not be as pertinent a consideration as it once was for customers.

How to make the switch

The hardest part of the switch is finding a bank that aligns with your ethics, gives you the rates you’re looking for and offers the features you need. In this decision-making process: compare, compare, compare.

Here, the following might be useful:

• MoneySuperMarket
• USwitch
• GoCompare

It’s also important to make sure that you don’t miss the small print and that you’re up to date with all the Ts and Cs.

Once you’ve decided to make sure you have a smooth transition, make a note of all your automatic payments and deposits, and prepare them for the switch, so you don’t end up missing any payments.

Finally, enrol, and be sure not to close your old account until your new account is active and ready to use.

Tags: bank account, banking, banks, current account, esg

Tougher checks for borrowers

by Admin

The Financial Services Authority (FSA) have today released mortgage reform proposals which are designed to regulate mortgage lenders and help prevent a repeat of the house price bubble that burst at the end of 2007. The approach they have set out is to prevent “reckless” lending to borrowers who can’t afford to repay the loan, which leads to foreclosures and repossessions and ultimately declines in the housing market.

The proposals seem to be designed to protect the borrower, by making it the responsibility of lenders and mortgage advisers to check that the mortgage is indeed affordable. There are proposals to prevent lenders charging the borrower for being in arrears, as long as the borrower is trying to reduce those arrears. However, as the BBC are reporting, there are fears that these measures would make it even harder for people to get a mortgage as lenders (who are already limiting the mortgage options available and the ease with which they can be taken) will insist of tough checks to make sure that the applicants really can afford the repayments.

Some commentators think that this might hurt the housing market, which currently needs all the help it can get, because it will mean fewer people buying houses. However, we should bear in mind that at this stage they are only proposals by the FSA, they may be modified or relaxed before they are introduced, and they are unlikely to take effect for 12 months or more. We may find, therefore, that a number of borrowers will try to take mortgages out before the new rules come in and lenders may be tempted to take advantage of this crowd by offering more and better deals. It’s not all bad news for those looking for a new mortgage, and we may see that this helps (in the short term) both house prices and the mortgage market. Long term, the reason behind the proposals is to make house prices and the market in general more stable, instead of the boom and bust that we have seen in recent years. This will mean house prices are unlikely to increase at the rate they did in the mid-2000s, but should manage a steady climb that is more reassuring for borrowers and lenders alike.

Tags: banks, Economy, house prices, houses, Loans, Mortgages, recovery

The U.S. economy as one to watch

by Admin

I’m in the United States at the moment, and the news here is of an economy that is still unstable. A recent report shows that not only are employers still cutting jobs, but that the number of jobs lost in June was more than were lost in May. Despite this, Barack Obama is confident that things are stabilising.

Why is the US economy important to us in the UK? The United States has the largest economy in the world and affects the economies of most of the rest of the world, including the UK. There are a range of ways economies affect one another – for example, if the US suffers from a poor economy there will be less demand in the US for British goods and services, as money is tight. Also, our financial institutions work very closely with those in the US – the bad debt created with the sub-prime loans in the US affected banks worldwide, and our own banks had been making sub-prime loans of their own.

It will be possible for the UK economy to recover before that of the USA – and in fact it might happen that way – UK industry does not seem to be suffering as badly as in the US, and we have a smaller economy to turn around. However, it is most likely that the global recovery will begin only once the US itself is in recovery – and the news over here suggests that’s some way off, at least for the moment.

Tags: banks, Economy, recession, recovery, unemployment, us