Make £12,000 by switching bank

Residents of the UK could save £400 a year - adding up to £12,000 over a working life - by switching bank account, Which? has found.

The consumer body found that more than one person in three is annoyed with their bank, but in the last two years just five per cent of people have changed account.

Expensive overdrafts, loans, and credit cards - coupled with poor rates of interest on savings, current account balances, and ISAs - mean people who stay loyal to their bank are missing out on huge potential savings.

"More than one in three people are annoyed with their bank, which is hardly surprising when you consider some of the charges they dish out and the worthless products they try to sell," said Which? editor Malcolm Coles.

Along with expensive products, Which? also attacked the major high street banks for offering "unnecessary products" as well as charging for services that cost very little.

Hefty charges for unauthorised overdrafts and charges for using bank cards abroad were singled out as areas where banks made big money from customers. However, customers can avoid these charges by shopping around. Nationwide, for example, does not charge for use of cards abroad and the interest rate on an unauthorised overdraft for Alliance & Leicester Premier current account is just 7.9 per cent.

Payment protection insurance was given as the prime example of an unnecessary product, according to Which?

The consumer watchdog said this product was expensive, gives limited cover and, for many people, is worthless.

But despite the heavy savings that can be made by shopping around for products, rather than just going to a high street bank, four out of five people bank with one of the biggest five banks. But for savvy consumers there is a far wider choice - with more than 100 current accounts available to UK residents.

And switching accounts has never been easier - with banks required to hand over details of all standing orders and direct debits to the new bank, and transferring an overdraft as simple as a credit card balance transfer.

This means for customers wanting to switch to a better deal, filling in a single form is often enough.

"The banking industry made more than £35 billion last year," said Which?, with Mr Coles adding: "We think more people should switch banks. It isn't difficult - 90 per cent of people who have switched say that they found the process straightforward."