Run out of bank switching rewards? Here's how to make cash from your bank account by referring friends

Which banks will pay me to 'refer a friend'?

Like the banks' standard switching offers, refer-a-friend bribes can come and go – but these three providers told us their referral offers should be around for the foreseeable future:

• £100 each with Nationwide. When it comes to referral offers, this is the big one.
  
  You'll need to send your friend a personalised referral link, which they can use when switching to a Nationwide FlexAccount, FlexDirect or FlexPlus account.
  
  Your friend will need to transfer two direct debits as part of the switch, and you'll each be paid your bonuses into your accounts within 30 days of the switch completing.
  
  The FlexDirect account also pays interest at 5% AER for a year on balances of up to £2,500, as long as the account is credited £1,000+/mth (the rate drops to 1% after the first year).
  
  And if your friend's looking for a packaged bank account, the FlexPlus is a top pick, offering £500+/yr of travel, mobile and breakdown cover for a total of £156/yr, paid as a monthly fee.
  
  You can bag the referral money for recommending up to five friends per tax year, meaning there's a potential £500 of yearly free cash up for grabs.
  
  And you don't even need to have a Nationwide current account to benefit from the offer – you can also refer someone if you have a Nationwide mortgage or savings account.
  
  But remember, Nationwide's terms say it can reclaim the switching cash from both of you if your friend closes their account "without good reason" within three months of receiving the bonus.
  
  
• £75 each with TSB. The bank offers a decent £75 each for you and a friend if you refer them, and they switch to a Plus or Classic account.
  
  You'll need to be a TSB current account holder to make the recommendation, and your friend will need to pay in at least £500 and switch two direct debits. Like Nationwide, you'll need to send your friend a referral link, and you should both receive your bonuses 28 days after the switch completes.
  
  The Classic Plus account also pays 3% AER on balances of up to £1,500, as long as the account is credited £500+/mth and you've registered for online and paperless banking. 
  
  You can get paid to recommend up to five friends per tax year – a potential £375 annual earning.
  
  
• £50 each with First Direct. You and your friend could earn £50 each if you refer them and they switch to a 1st Account current account. At the moment, First Direct's standard bank switching bribe is also £50, so technically your friend doesn't need you to refer them to get the cash – but if your friend's planning to switch anyway, see if they'll let you have a slice of the pie by referring them.
  
  At the moment, you'll need to ring up First Direct on 0345 6100 100 and give it your friend's details to refer them, but First Direct says it's running a trial to let customers refer friends online, which should be rolled out to all customers by the end of the year.
  
  Your friend will then need to transfer £1,000 into their new account to qualify for the bonus, and once they've done this you'll both receive your rewards within 28 days.
  
  The account has a £250 0% overdraft for eligible customers and offers a linked regular saver paying 2.75% AER – and if customer service is key for your friend, First Direct consistently ranks top or near the top of our biannual banking service polls. 
  
  You can refer up to five friends a year, meaning you could make £250 annually.
  

Will I need to pay tax on my bonus?

While TSB told us its bonus isn't taxable – as it's paid as an incentive rather than a return on your money – Nationwide says you might need to pay income tax on your payment (we've asked First Direct about the tax status of its bonus, and will update this blog if we hear more).

So it's always best to double-check the tax status of any bonus you're paid with the bank, and check with HMRC if you're unsure whether you need to pay tax.

What happens when you switch?

As part of the Current Account Switching Service (CASS), when you switch to a new account your old account will be closed and your money, direct debits and standing orders will be moved across. More than 40 providers, including all the ones which offer refer-a-friend deals, are signed up to CASS.

As part of CASS, any payments that usually go to your account will also be moved across – so, for example, your salary will automatically be paid into the new account once you've switched.

If you've got any recurring payments from your debit card – for a gym membership or magazine subscription, for example – these won't be moved over automatically, so you'll also need to remember to give your new card details to these companies.

If you've got other products with your current bank, such as a credit card or ISA, this WON'T generally be affected when you switch away as these products are usually separate to your current account.

The exception is if you've got a specialist regular savings account which is linked to your current account. You may also have to close this account if you switch your current account to a different bank, so weigh it up first (and check whether you could get something similar with your new account).

And remember that the top banks will require you to pass a not-too-harsh credit check to open an account – too many applications close together can have an impact on other credit applications you make, so bear this in mind.