Banking Five mistakes - and how to avoid making them

If you are staying loyally with a bank, using an overdraft or failing to read the small print, you may well be losing out, writes Holly Mead

- Holly Mead

Many of us frequently shop around for the best insurance deals or supermarket offers but forget about their bank account - and it could be leaving you hundreds of pounds worse off. Here are five common banking mistakes and how to avoid them.

Thinking that loyalty pays HSBC, Lloyds, NatWest and Barclays dominate the current account market in the UK, and are responsible for three-quarters of accounts. However, none of the big four are rated in the top five for service, says Alastair Douglas, the chief executive of the credit app Totally Money, referring to a survey of customers by the Competition and Markets Authority (CMA).

Sticking with a trusted brand or perhaps a bank you have been with since childhood may seem like the safe option, but you could be missing out.

An array of new challenger banks offer slick apps, top savings rates, and handy features that make it easier to split a bill or divvy up your savings. Respondents to the CMA survey ranked Chase, Monzo and Starling as top for "overall service quality".

Almost 1.2 million people switched bank last year, according to payments network Pay UK, with online or mobile banking (46%) the top reason they preferred their new account, followed by the interest they earned (37%) and customer service (32%).

Switching bonuses can also make opening a new account worth it. Current deals include £175 free cash to those who switch to First Direct and £150 for those who move to NatWest. Be sure to check the terms and conditions - some accounts require a minimum monthly deposit or a certain number of direct debits to qualify.

Switching is easy: provide your old account details to your new bank and it will do the legwork, including transferring any direct debits. Under the Current Account Switching Service guarantee, the whole process should only take seven working days.