Halifax fires salvo in current account war

The deal, launched today, makes it our top-pick if you're in credit but it can be extremely pricey for those who go overdrawn (see Best Bank Accounts guide).

However, those who deposit at least £1,000 a month (equivalent to a £14,700 annual salary) qualify.

How to grab the bonus

You must apply via Moneysupermarket.com, not through Halifax (or its Bank of Scotland sister), and switch your direct debits and standing orders over.

• Step 1. Open the account on Moneysupermarket.com. If you apply via Halifax you will get the long-standing £5 monthly payment but not the new £50 bonus.

• Step 2. Use the 'Halifax Switching Team' to move direct debits and standing orders across.

• Step 3. Pay in at least £1,000 a month.

• Step 4. The £50 will be credited to your account within a month.

The monthly payment is effectively a £6.25 bonus with basic rate tax (20%) deducted. If you're a higher or top rate payer you must declare the payment and pay additional tax.

The offer is not available to those switching from a Halifax or Bank of Scotland current account.

Moneysupermarket says the £50 bonus will be around for at least the next four weeks, though there is no end date.

If you cannot deposit £1,000, the Alliance & Leicester (A&L) Premier account offers a £100 sign-up bonus, a year's interest-free overdraft and inclusive European travel insurance if you pay in £500 a month.

Halifax switchers also get a fee-free overdraft for the first four months but after that ...

... what if I go overdrawn?

Halifax charges £1 a day if overdrawn by up to £2,500 within your agreed limit, £2 a day if over £2,500 but within an agreed limit, and £5 a day if you're in an unauthorised overdraft.

The £1 daily fee caused outcry when it was launched late last year (see the Anger over Halifax charges MSE News story) as it's charged regardless of how far overdrawn you go which hits those who slip over the hardest.

If you're likely to go overdrawn, our top pick is the A&L Premier account (above) due to its £100 bonus and interest-free overdraft.

As with any current account and overdraft application, you'll need a good credit score to be accepted.

Our view

Martin Lewis, MoneySavingExpert.com creator, says: "Halifax has launched a major salvo in the current account war. Already top for those always in credit who want a long-term, consistent deal, its new bonus slices into A&L's territory as the biggest sign-up bribe.

"Those prepared to switch regularly could profit from going to A&L and moving again in under a year, especially when considering its added travel insurance bonus, but moving accounts can be a hassle for most.

"However, the one big long-term warning is never, ever go overdrawn with this Halifax deal. While £1 a day doesn't sound much, if £10 overdrawn it's the equivalent to 3,650% interest."

Further reading/key links

Top accounts: Best Bank AccountsReclaim cash: Bank Charges