Banks are desperate for your custom, and they're offering a host of cracking incentives. Many complain about their bank's service - but do nowt. So it's simple, don't bitch, just switch.
1. Free £200 for switching.
Some banks want you so much they'll pay you to switch. Here are the best bribes on offer (you'll need to use their official switching services)...
- Free £200 (£150 upfront, £50 if you stay). HSBC Advance* pays £150, as long as you switch 2+ direct debits/standing orders and pay in £1,750/mth. Register for online/mobile banking within 60 days and if you're still with HSBC after a year, you get another £50. Plus there's a 5% fixed regular saver.
- Free £125 & No.1 for service. Apply via this First Direct* link & switchers get £125 (£100 direct) once you've paid in £1,000 within 3 months. The bank's won every service poll we've done (91% rate it 'great'), has a £250 0% overdraft and gives access to its 5% fixed regular saver. Pay in £1,000/mth or you face a £10/mth fee.
- Free £110 + up to £5.50/mth. Co-op Bank gives £110 (you need to switch 4+ 'active' direct debits), plus sign up to its Everyday Rewards scheme and jump through a few hoops to get up to £5.50/mth. No min pay-in for the £110 but it's £800/mth for the extras.
- Free £100 + £3/mth. Halifax pays switchers a £100 sign-up bonus (no min pay-in). Plus get £3/mth if you pay in a min £750/mth, stay in credit & pay out two direct debits/mth.
- Free £50 M&S gift card + £5/mth. M&S Bank* gives switchers a £50 M&S gift card (no min pay-in), plus for the first 2yrs it adds £5/mth to the card if you pay in at least £1,000/mth. There's a £100 0% overdraft and 5% fixed regular saver. Switch 2+ 'active' direct debits to get the £50 gift card & keep them active for the £5/mth. M&S warns set-up may be delayed as it's been swamped with applications.
2. Top for savings interest: 3% on £15k or 5% on £2.5k.
Instead of cash bribes some banks pay loss-leading interest for those in credit. Unlike with the free cash accounts above, which you have to switch to, these don't make you close your old one, so you can have multiple accounts each offering savings perks. To do it this way, say no to using the 7-day switching service.
- Get 3% on up to £15,000. Open a Classic Account with Bank of Scotland and add the Vantage feature and you get 3% AER variable on £3,000 to £5,000. You can open 3 accounts so can boost returns to 3% on £15k. (Each needs a £1k/mth pay-in & two direct debits paid out/mth.)
- Get 1.5% on up to £20,000. Santander* pays 1.5% AER variable on up to £20k. Its £5/mth fee is covered for most by up to 3% cashback on bills paid by direct debit. In a couple? You can earn 1.5% on a huge £60k by opening 3 accounts. (Each needs a £500/mth pay-in & 2 'active' direct debits.)
- 5% FIXED for a year. Nationwide FlexDirect is 5% AER fixed for 1yr on up to £2,500 - 1% AER variable after (£1,000/mth min pay-in).
You can open multiple accounts to max the gains. Just ensure you meet all the criteria including min direct debits, and split your cash to boost returns. Also, be aware each application has a small impact on your credit file.
3. Pay £10/month and get up to £600-worth of insurance.
For a fee, some banks offer a host of 'freebies' including insurance and breakdown cover. If you're a family with smartphones, go abroad a lot or have large bills, these could win.
- £600+/yr of insurance for £120/yr. We think Nationwide's FlexPlus* is a cracker. It has a £10/mth fee, but gives world family travel insurance up to age 74, family smartphone insurance and European breakdown cover for you in any car. Plus you get 3% AER variable on balances up to £2,500, and extended warranty on new-ish electrical goods. A family needing all this would pay £600+/yr separately.
- Got large monthly bills? NatWest may beat it. NatWest's Reward Platinum costs £18/mth (£216/yr), but you get world family travel insurance, smartphone insurance, UK breakdown cover and 3% cashback on most bills paid by direct debit.
See more options and full details in Packaged Bank Accounts. Always ensure you'll use the perks and you can't get 'em cheaper elsewhere, otherwise cancel & go fee-free. If you only opened one because the bank said you must, try our free Reclaim Packaged Bank Fees tool.
4. The top accounts you don't need to pay in to every month.
Many of the top 'free cash' accounts require you to make a minimum pay-in. It's just the bank's way of ensuring your income/salary goes through the account. Yet some don't. So if you've a low or uncertain income, these are the ones where you can get the initial perk without a minimum pay-in.
Co-op Bank pays £110 within 45 days of your switch completing, although you do need to switch 4+ 'active' direct debits. Halifax pays switchers £100, plus you'll get it before the switch is completed. And M&S Bank* gives a £50 M&S gift card within a month of switching, as long as you switch 2+ 'active' direct debits.
Can I jemmy the pay-in? Usually. The rules say you need to pay in a set amount from external sources. So let's say you want a £1,000 pay-in but only have £500 coming in. Get the £500 paid in, withdraw it either as cash or to another bank, then pay it back in, and BINGO, you've qualified.
5. Seven-day switching means it's no hassle.
The service is now over 3 years old, and in our last poll 76% of you said it was hassle-free. Only 12% said it was a nightmare. Within seven days your new bank will:
- Switch your direct debits and standing orders for you.
- Close your old account & ensure all payments go to the new one.
As Sophie says: "I've switched 2 accounts in the last few years. Was so easy I persuaded my parents to do the same."
If switching, to get the perks you must switch using the bank's official service. Plus most new accounts need you to do the following...
a) Pass a credit check, though these aren't normally too harsh.
b) Pay a 'min monthly deposit'. In reality, it's just how they ensure you pay your income in. A £500/mth pay-in = £6,000/yr salary. If this may be tricky, see point 4 above.
c) Switch 2-4 direct debits/standing orders.
6. Which pays more? Free cash or savings interest?
To work it out we need to get a little nerdy...
a) It all depends on how often you're prepared to switch. You can get up to £280-ish from HSBC from free cash & maxing the regular saver. To match that you'll need c. £18,700 in Santander, or £9,400 in two Bank of Scotland accounts. Yet they keep on earning, so if you don't want to keep switching then savings accounts are likely better long term.
b) Where'd you save otherwise? The top easy-access savings account pays 1.01% AER, so it's possible to switch current account for a switching bribe and earn interest on other savings elsewhere. Make sure you factor that in too when deciding which accounts to open.
c) Tax. The free cash for switching is tax-free. Bank account interest falls under your personal savings allowance, so basic-rate taxpayers can earn £1,000/yr in interest before being taxed (higher rate £500). If you pay savings tax, switching bribes become more attractive.
7. Got an overdraft? Cut charges to 0%.
If you often go into the red, then not all of the accounts above are right for you - instead, focus on cutting your overdraft costs to make it easier to clear. Below are two good options (you will be credit-scored).
- Under £375 overdraft? First Direct* has a £250 0% overdraft, but also currently gives £125 to switchers via this link (£100 direct) so that'd instantly clear some. You need to meet its min £1,000/mth pay-in or it has a £10/mth fee.
- Larger limit possible but not certain: Nationwide's FlexDirect may give a bigger 0% overdraft than First Direct, but only for a year (50p/day after, so aim to clear before). The limit is credit-score dependent.
Full info & more ways to save in Cut Overdraft Costs.
8. The accounts if you can't get an account.
You need to pass a credit check for those above. But basic bank accounts don't do such stringent checks (though most do a credit check for ID purposes), as they just provide a no-frills, no-overdraft service.
Options include the Barclays Basic Account, Virgin Money's Essential Current Account and Co-op Bank's Cashminder. See Basic Bank Accounts for full info.
9. Fed up with banks? Want something different?
Try a credit union (local savings and loan non-profit organisations), though not all offer current accounts, so check yours.
10. Barclays customer? Get £48/yr free.
Its service is questionable and it's not great on perks, but if you want to stick, at least get a free £48/yr from Barclays.
This article first appeared in the weekly email on 11 January 2017.