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, millions are being tempted to manage two, three or even more current accounts to bag cash incentives and perks.
Consumer experts caution that while there is no rule against holding multiple accounts, rapid-fire applications can trigger multiple hard credit checks, temporarily denting a credit score. MoneySavingExpert warns that having more than one overdraft can make finances appear overstretched, raising red flags with lenders.
Practical issues also arise, as some accounts require minimum monthly deposits or a set number of direct debits, which can be overlooked when juggling multiple accounts. GoCompare recommends applying gradually rather than opening several accounts at once to avoid damaging your credit profile.
Another concern is the Financial Services Compensation Scheme, which protects up to £85,000 per person per banking group. Funds above this limit with the same institution would not be covered, so distributing money across different banks can enhance protection, but only if accounts are meticulously managed.
Rebecca Goodman, a personal finance expert, advised consumers to research thoroughly before applying, considering fees, requirements, and whether the account will actually save money. Both MoneySavingExpert and GoCompare suggest multiple accounts can be beneficial for disciplined switchers, but only if balances, fees, and overdrafts are tightly controlled.
