Jasmine Birtles
Your money-making expert. Financial journalist, TV and radio personality.
Make money by switching your bank account
Reading Time: 4 minutesSwitching bank account to another provider is something everyone should consider. The benefits can be enormous and it’s actually simple to do. As with any service provider, it pays to always be on the lookout for a better deal. Switching bank accounts is no different.
Many of us are happy with our bank account and have no desire to switch, but that’s often because we’ve have never considered it and aren’t aware of the benefits it could bring. Financial regulation in the UK allows consumers to switch whenever they like and banks know this. As a result, they offer various perks to encourage customers to switch.
Some people switch periodically to make sure they are always taking advantage of the latest offers. Once you switch you’re be able to move your current account, along with all your direct debits and standing orders, to another bank within just seven days. It’s also completely free and the banks do all the hard work for you.
Did you know people in the UK are more likely to get divorced than switch their bank accounts during the course of their lives? This is an incredible statistic – and it’s due to us getting comfortable with our familiar bank.
Here are the latest current account switches you can make to save money and earn great rewards:
- Meeting income requirements
- Current accounts that pay you interest and cashback
- Current accounts that pay you to switch
- Ready to change yet?
Can’t meet minimum monthly deposits?
Most bank accounts offer rewards if you pay in a certain amount each month. For many people, their salary will easily cover this minimum requirement. However, if your salary isn’t high enough, you’re not earning anything, or you’re retired – don’t panic!
You’ll need two accounts to make this work, but that’s simple enough to set up. Your second current account should be with a different bank.
Put the monthly minimum amount – say £1,000 – into the second bank account.
Set up a standing order so that this amount transfers into your main current account.
Set up a second standing order for the following day on your main current account to shift the money back again.
This ‘cheats’ the minimum income requirement, as you’re simply shifting the same £1,000 in and out of the account every month!
Current accounts that pay you interest and cashback
Santander 123 Current Account
Let’s examine what Santander is offering first, while more information can be found on their website; here are the basics:
- Monthly interest of 1.00% AER / gross (variable) on balances up to £20,000. You’ll receive monthly interest of 1.50% AER/1.49% gross (variable) on balances up to £20,000 before 5 May 2020
- Up to 3% cashback on some household bills, capped at £5 in each cashback tier each month. There is no cap before 5 May 2020
- Pay in at least £500 into your account each month and have at least 2 active Direct Debits
- Earn cashback on your household bills and interest on your balance for a £5 monthly fee to maintain the account
- Arranged Overdraft facility (if you’re eligible)
To qualify, you’ll need to:
- Pay at least £500 into your account a month
- 2 active Direct Debits – Think phone, mortgage, rent, utilities
- Be over 18 and live in the UK permanently
Good if: you know there will always be at least £500 going in every month and you’re happy to use this as your main account.
Bad if: you’re not prepared to pay a small fee of £5 every month to enjoy the benefits.
Nationwide FlexDirect Account
FlexDirect could suit you if:
- Your balance is often in credit – If you pay in at least £1,000 each month you’ll get 5% AER (4.89% gross p.a. fixed) interest on balances up to £2,500 for the first 12 months, and 1 % gross p.a./AER variable after that.
- You’d like an arranged overdraft – pay no interest on your arranged overdraft for 12 months from the date you open the account.
- You’re happy to do most of your banking online, using thier app and Internet Bank.
Good if: you usually have a balance of £2,500 or over.
Bad if: you’re always dipping into your overdraft.
Current accounts that pay you for switching your bank account
There are other perks to switching your bank account. Some banks actually offer a cash incentive if you do. Here are the ones doing it in 2020:
First Direct free £100 for switching
First Direct are offering £100 if you switch to their standard account. This is still a worthwhile reason to switch if your current account isn’t offering you any perks.
There are those who switch accounts every now and again just for this very reason. Switching accounts every 6 months can actually be rather lucrative if different banks are offering similar cash incentives.
This is a great offer, but make sure you’re aware that you must pay in at least £1,000 a month.
HSBC – free £175 for switching
Another bank offering something similar is HSBC who are giving away £175 to anyone who switches. This is £75 more than First Direct. Similar T+Cs apply of course, but imagine switching this way every few months just for the small cash injection it provides!
Ready to change yet?
Many of us can’t be bothered to change our account every six to twelve months to ensure we’re getting the best deal on the market. Some of us have just never thought of it. That’s okay, but it’s worth investigating.
Banks rely on you not looking for alternative accounts, they offer perks to new customers while you just get the same service you always did, good or bad. But now it’s never been easier to switch so it’s a great time to take advantage of the incentives available.
You’re under no obligation to stick with your current bank, and the rewards are out there for those who are open to change.
One thing that might need to be considered is where the nearesst branch of any bank you switch to is. This could be especially important if you plan to collect coins in jars and do a lot of depositing or even if you sell stuff online and accept cheques or postal orders as payment. Although some banks do except deposits via the Post Office.
Does anyone out there know which is the best offshore bank to
Put your money in giving the best interest rate thanks.
Obviously none of these banks want pensioners or other low earners as customers, if they only offer these accounts to people with at least £1,000 a month available to pay in. Doesn’t that just prove that banks are out to make money, not offer a good service to customers?
Let’s hear it for a bank that actively encourages pensioners. After all, they have a guaranteed income for life and a pay-as-you-go mindset, making them a better risk in the long term.
Very good point Maggie. As you say, there’s a business opportunity there. It’s time that maybe one of the supermarket chains considered special banking offers for pensioners.
Interesting. Sounds like you could go around 20 to 30 years without be able to change your current accounts as a pensioner! But if a full state pension is about 113 pounds per week which works out as 452 every 4 weeks or 489 pounds monthly could you not add savings interest to this (or transfer money from an external savings account)? Look again as I found an account that accepts 500 pound a month deposit. Also surprised that National Savings & Investments haven’t provided a current count – unless they do not want potential borrowing customers.
A huge thank you to you. I’ve been struggling with my basic Barclays account and I’ve been thinking of switching to a different account but did not know which one. Basically, you’ve done the job for me. Thanks.