Run out of bank switching rewards? Here's how to make cash from your bank account by referring friends
We've spent years shouting about the cash bribes offered by banks if you switch your current account to them. But if you've run out of banks to switch to, or you'd like to stick with your current provider, you could still be able to make money from your existing account – with a little help from your friends.
Of course, you can't put a price on the warm, fuzzy feeling of friendship – but some banks have valued it at up to £500 a year.
That's because several providers now offer cash rewards if you refer a friend and they switch their bank account.
The formula's simple – you recommend your bank or building society to a friend, usually by sending them a personalised link, they switch, and you each get an equal cash reward of up to £100. You can generally get paid for referring up to five friends a year.
The rewards per referral aren't quite as lucrative as the biggest switching bribe, which is currently £175 in upfront cash. But if you've run out of switching offers, or you'd like to keep your current account because it offers good service or perks, it's a good way to carry on making money from your account (and no doubt boost your popularity).
And if your friend's also run out of direct switch offers, or they've been planning to switch to that account anyway and want to make a buck while they do, you could be doing them a favour too – unless they can get more with an individual switch incentive.
See our Best Bank Accounts guide to see how to bag up to £175 in free cash for switching your account.
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.
Who can I refer?
While these offers are marketed as 'refer-a-friend' schemes, in reality you can recommend pretty much anyone – whether that's a friend, partner, colleague or even someone you don't particularly like.
For most providers, the only restriction is that the person you refer needs to be a new customer, meaning they haven't held any accounts with that bank or building society over the last few years.
And Nationwide doesn't even have this restriction, letting you refer a friend as long as they haven't switched a current account – even if they do already have a Nationwide mortgage or savings account.
Oh, and you can't recommend yourself.
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.
Is it the right account for my friend?
While free cash is always tempting, switching bonuses (whether individual or via refer-a-friend) shouldn't be the only consideration when opening a new bank account.
Depending on your friend's situation, they might want an account that offers cashback on bills, or has good rates for people in their overdrafts.
So it's worth them doing some research into what the account offers before you make your referral, and checking whether there are other accounts out there that meet their needs better.
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.
No scheme for your bank? Keep your eye out for revivals
While the providers above offer the current refer-a-friend schemes, other banks do sometimes offer referral bonuses for limited times – so you'll need to be ready to pounce.
Here are a couple of schemes other banks have run in the past – although there's no guarantee they'll be back:
- £100 each with NatWest. NatWest piloted a refer-a-friend scheme in 2018 with 300,000 customers, which let participants refer up to five friends for £100 each. This would have made it the most generous scheme, jointly with Nationwide – but it's not available at the moment, and it's unclear whether NatWest will be bringing it back.
- £50 Amazon voucher each with Santander. It's technically not cash, but Santander's refer-a-friend offer earlier this year gave £50 Amazon vouchers to any Santander customer who recommended a friend to a Santander current account.
Santander says that while there are no imminent plans to bring this offer back, it's "frequently reviewing our products and services".