Bank customers chasing switching bonuses and cashback deals are being warned that opening too many current accounts could have unintended consequences. With banks competing fiercely for customers, many are managing two, three or even more accounts to bag incentives and perks.
Consumer experts highlight potential pitfalls. MoneySavingExpert notes that while there is no rule against holding multiple accounts, opening several in quick succession can trigger multiple hard credit checks, temporarily denting credit scores. Having more than one overdraft can also make finances appear overstretched, raising red flags with lenders.
Practical issues include minimum monthly deposits or direct debit requirements that can be overlooked when juggling accounts. GoCompare warns that spreading money too thinly increases the risk of missed payments, fees or fraud. It recommends applying gradually to avoid damaging credit profiles.
Another concern is deposit protection. The Financial Services Compensation Scheme covers up to £85,000 per person per banking group, so funds above this limit with the same institution are not protected. Distributing money across different banks can enhance protection but requires meticulous management.
Rebecca Goodman, a personal finance expert, advises consumers to research before applying: consider whether the account will save money, any fees, and if you meet the requirements. Both MoneySavingExpert and GoCompare suggest that multiple accounts can benefit disciplined switchers, but only if balances, fees and overdrafts are tightly controlled.
