A NUMBER of banks hope to attract new customers by offering free cash to those who switch to them, meaning Brits can earn hundreds of pounds just by changing banks.
And it’s less hassle than you think – with a switching guarantee programme promising to do it all for you within seven days.
But not every bank that gives cash bonuses to new customers is worth switching to, which is why we’ve compiled a list, below, of the five best bank accounts – taking into account customer service, interest rates and switching incentives.
We’ve also listed the banks offering the biggest cash bonuses to those only interested in the freebie.
1. Tesco Bank…best for interest
If you’re able to pay in at least £750 a month, and pay three direct debits from the account, you can earn 3 per cent interest with the Tesco Bank current account.
You’ll only get the interest on balances up to £3,000 and the offer runs until April 2019.
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This account is good because it pays a high interest rate, but doesn’t require a high monthly deposit (like TSB’s £1,000 a month requirement) and gives customers Clubcard points on debit card spending.
Customers will get one point per £1 spent on each debit card purchase (£1 minimum) in Tesco, and one point per £8 spent on each debit card purchase (£8 minimum) outside of Tesco.
2. TSB…best for free cash when switching
TSB is currently giving £130 to those who switch their everyday banking to them before June 26 – but only with this MoneySavingExpert.com code, otherwise no cash sum is given.
That’s not all – you’ll get £5 cashback every month for having two direct debits on the account, plus another £5 a month if you spend with your debit card at least 20 times a month.
Over 12 months, that’s an extra £120 of free cash.
The minimum monthly deposit requirement is just £500.
There’s no monthly fee, and customers will earn interest of 3 per cent on balances up to £1,500.
3. First Direct…best for customer service…
First Direct has long been credited for its excellent customer service, and it regularly wins customer satisfaction polls.
The online-only bank is also offering a £100 switching incentive for new switchers (if you pay in at least £1,000 within three months of opening the account), and a further £100 if you decide to leave the bank after six months.
The account is free for the first six months, after which there’s a £10 monthly fee – but this can be avoided if you maintain an average monthly balance of £1,000, or pay in this amount each month.
…and best if you’re overdrawn
Again, First Direct’s current account comes out on top, with a £250 overdraft at 0 per cent interest.
If you go over the £250 limit, you’ll need to pay interest of 15.9 per cent EAR – but this is one of the lower-cost overdrafts on offer by a bank at the moment.
How do I switch bank account?
MOST banks will require new customers to switch using the free Current Account Switch Service.
This programme takes care of the bank switching process for you by moving all your incoming and outgoing payments, moving your outstanding balance and closing your old account.
The majority of banks are signed up to the service so you’ll use it automatically when applying and switching to a new account via the bank’s website or in branch.
The guarantee means that if anything goes wrong with the switch you will be refunded for any financia losses incurred.
4. Nationwide…best for the extras
If you spend big sums of money on insurance each month, the Nationwide FlexPlus current account could save you a bundle.
It costs £10 a month, but customers will get free worldwide mobile phone insurance for the family, worldwide travel insurance for the family, extended warranty on appliances, plus UK and European breakdown and recovery assistance for your car.
On top of that, customers will earn 3 per cent interest on balances up to £2,500.
Is switching worth the hassle?
Switching bank accounts does require some effort, but yes it is worthwhile to switch if the bank you’re switching to offers a higher rate of interest than you’re currently getting, good perks (such as free travel insurance) and has good customer service.
Switching just for the cash perk when you’re with a bank that offers good service, low overdraft rates and decent interest, may not be the right decision for you.
With the Current Account Switch Service it’s relatively easy and hassle-free to switch, because they take care of the whole process for you and have an obligation to switch your current account with seven working days.
If the switch takes longer and you lose money as a result – such as a direct debit not being paid and you’re charged a fee – they have to refund you.
The accounts that give the most cash for switching
- TSB’s Classic Plus pays £130 (with MSE link) to those who switch to it, plus £10 a month
- First Direct pays £100 to new customers who switch their everyday banking to them
- M&S Bank will give a free £125 gift card to new customers, and you can get £5 added to the gift card for free each month if you pay in £1,000 per month
- The Co-operative Bank will pay £110 to new customers who switch to it, plus up to £5.50 a month with its Everyday Rewards scheme
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