We would like to think that loyalty is rewarded. But unfortunately, in the world of bank accounts, you are more likely to get a little something extra if you make a change. Banks tend to offer a juicy switching bonus to new customers, not to those of us who stick around.
So if you are interested in switching accounts, we take a look at what kind of rewards you can get.
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Do you get rewarded for not switching?
Unfortunately not. Switching bonuses or cashback deals are usually used by banks to attract new customers.
It may be the case that you have an account that includes cashback rewards or customer perks as standard. Accounts like Santander’s 123 Lite include cashback on household bills and a monthly interest rate.
However, this account also charges a monthly fee. Also, its four-month interest- and fee-free overdraft is only available to people switching their account to the bank.
So if you want to get a little something extra, you are most likely going to have to make the switch.
What switching bonuses can I get?
While switching bonuses aren’t as commonplace as they once were, there are still several bank accounts that will give you a little something extra for changing bank accounts.
So here is a rundown of the types of switching bonuses you can get at the moment:
- HSBC: HSBC will give you £125 for making the switch and access to its regular saver account. You need to set up at least two direct debits or standing orders with the account in order to qualify for the bonus, and you need to pay in £1,750 a month.
- First Direct: The online-only bank offers switchers £100 when they open an account and pay in more than £1,000 within three months of opening the account. You will also have access to its regular saver.
- Santander: While it’s not hard cash, if you switch to a Santander bank account, you can get a four-month interest- and fee-free overdraft. In order to be eligible, you must use the Current Account Switch Service, pay £500 into your account and have two active direct debits.
- Virgin Money: New customers to Virgin Money get a free 12-bottle case of wine from Virgin Wines. Virgin will also donate £50 on your behalf to any charity you choose from on the Virgin Giving website.
Is there a catch?
Getting £100 just for switching your bank account may seem too good to be true. But in some ways, it is really as simple as getting money for doing very little. However, you need to read the fine print in order to make sure you are eligible for the switching bonus.
Banks will typically require you to use the Current Account Switch Service in order to qualify for the bonus. This is super easy and simple to do. However, it does mean you can’t just open a new account and shut your old one.
There are also other things to bear in mind. For example, there may be a minimum amount you need to pay in each month to get your switching bonus. Or you will need to set up at least two direct debits or standing orders.
You also need to think about whether the bank account suits your financial needs. It is easy to get swept away with the idea of money in your pocket for switching. But if you are constantly in the red, and the account doesn’t have an interest-free overdraft, it may not be the best move. In fact, you could just end up racking up interest charges.
As with any financial product, it is best to compare like-for-like when making your decision. Look beyond the incentives on offer.