If you can’t wait for payday, it might be time to switch banks
If payday is just too far away, it’s worth taking a look at some of the new banks opening in the UK.
So-called “challenger” banks Monzo and Revolution allow you to withdraw your salary to your bank account the day before you are due to be paid, as long as it is paid through the BACS system. And if payday is Monday, you could have the money in your account the previous Friday – so get paid three days earlier.
Around 700,000 bank customers switched accounts last year, down sharply from more than one million in 2019. The current account switching service ( CASS ) attribute the decline to the pandemic, noting that the Covid-19 crisis had made people more reluctant to change, while banks themselves were found to have taken a more cautious approach, focusing on helping customers rather than marketing their services to new customers.
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CASS pointed to the fact that many banks withdrew switching incentives last year, which would have also shaken the number of switching accounts. However, over the last seven years a host of new banks have entered the UK market, challenging traditional banks by tempting customers with new features such as app-based banking, instant notifications when money comes in or leaves your account and an easy account. implement.
Two of fintech banks – so called because they use fintech – are trying to woo customers by allowing BACS payments to be spent before they are actually due. The reason for the move is believed to be to encourage customers to use fintech banks as their primary bank account rather than a secondary account.
Monzo was the first bank to offer its Get Paid Early feature to its 5 million customers, followed by Revolut’s Early Salary option to its 14.5 million users.
According to in Monzo, over 90% of the UK population is paid by BACS, and the scheme also includes payments for benefits such as SEED and family allowances, as well as student loans. The bank says that all banks could theoretically offer this service because money enters the system a day earlier, but most choose not to.
“Early access wages could be a real lifeline for many in these tough economic times,” said Revolut chief executive Nik Storonsky. “Our goal is always to provide Revolut customers with the services they need and the best possible experience.”
However, there is a potential catch. Although both banks offer the service for free, both reserve the right to recall the money if there is a problem and the BACs payment does not reach your account as expected.
A Monzo spokesperson told a consumer group Which? that Monzo would know by 4 p.m. if there was a problem on the sender’s side. If a wider banking problem was discovered after 4 p.m. – such as a bank having a major problem and having to delay all of its Bacs payments – Monzo says it would reverse the payment and notify the customer. She points out that such a scenario would be “extremely rare”.