THE number of customers who switched bank account dropped by 23,500 last year to just over one million, according to the latest figures from the payments service Bacs.

The fall in numbers belies the savings on offer, however. Customers could save on average £92 a year by moving to a different current account, according to the Competition and Markets Authority (CMA). Overdraft users could pocket even bigger savings - £180 a year on average for customers who are overdrawn for one or two weeks every month.

Kevin Mountford, banking expert at comparison website MoneySuperMarket, said lack of incentives is one reason why more people are not switching.

“The number of people switching their current account is yet again underwhelming - there are around 70 million active current accounts in the UK, but only 3.5 million users have switched since 2013,” he said. “Consumers need more of an incentive and this will only come if providers create more competitive and enticing products.”

Banks and building societies often offer sweeteners to encourage people to switch accounts, but a number of incentives have recently been cut back or withdrawn. First Direct, for example, has cut the switching cashback on its 1st Account from £125 to £100. Halifax has also scaled back the switching incentive on its Reward Current Account from £125 to £100. Clydesdale Bank, meanwhile, has done away with its £150 upfront cash incentive entirely.

However, experts agree that consumers should still consider switching. Rachel Springall, finance expert at Moneyfacts, said: “While it’s disappointing that there is less cash on offer compared to last year, this shouldn’t discourage consumers from considering a switch if they are on a poor deal. But it’s important to look at the small print of the account, not just the upfront incentive.”

Websites such as Moneyfacts, MoneySuperMarket, Moneysavingexpert and Uswitch can help consumers find a suitable current account, although it is vital to understand the terms and conditions because some accounts charge a monthly fee and many impose minimum funding requirements.

Those who are overdrawn might find it more difficult to switch, but it is not impossible. A spokesperson for Nationwide said: “Customers can still switch to Nationwide if they have an overdraft, but any overdraft must be repaid in order to close the old account. We may be able to offer an overdraft on the new account, if it’s required, but it would be subject to our own lending criteria.”

Customers who do not need an overdraft facility might want to consider a high interest current account. The Halifax Reward Current Account pays a reward of £3 every month, as long as users pay at least £750 into the account each month, pay out at least two different direct debits and remain in credit. There is also a £100 switching incentive.

The Nationwide FlexDirect Account pays interest of five per cent on balances of up to £2,500 for the first 12 months as long as users pay in at least £1,000 a month. The interest rate drops to one per cent after one year. If a Nationwide current account holder recommends that a friend or family member switches to a Nationwide current account, the building society will give both £100.

An overdraft will be more important than credit interest for some consumers – and a number of accounts offer competitive overdraft rates.

First Direct’s 1st Account charges no authorised overdraft fees and the first £250 of an overdraft is interest free. After that, the rate is 15.9 per cent. There is also an account fee of £10 a month after the first six months. However, users can avoid the fee if they pay in at least £1,000 a month, maintain an average monthly balance of £1,000, or if they also have a mortgage, savings account, credit card, personal loan, First Directory or home insurance with the bank.

Anyone who opens a 1st Account can also qualify for a £100 switching inventive, or £125 if they switch through MoneySuperMarket. Plus, if they are not happy with the bank and leave after six months, First Direct will pay £100 to say goodbye.

Switching to the M&S Current Account, including two active direct debits, comes with a £50 M&S gift card. The card will also be topped up by £5 a month for 24 months after the switch, as long as the holder pays in at least £1,000 a month and the two direct debits remain active. There are no overdraft fees and the first £100 is interest free. After that, the rate of interest is 15.9 per cent.

The Standard Account from Post Office Money charges a lower rate of overdraft interest at 14.6 per cent. Again, there are no fees on authorised overdrafts. There is no minimum funding requirement on the account and currently no switching incentive.

It is easy to switch current accounts with the Current Account Switch Service - and the whole process takes no more than seven working days. The receiving bank or building society will do all the hard work, including the transfer of all direct debits and standing orders, as well as any regular incoming payments such as salary.

Account holders can continue to use their old account up until the agreed switch date and if anything goes wrong with the switch, the new bank will refund any interest or charges incurred as a result.