Banks are increasingly relying on cash incentives to draw people in. Five banks now offer cash or store credit to new customers who switch their everyday banking to them, but does the incentive mean the current account is the best on the market?
Below, we look at the best current accounts for incentives and examine whether the incentive makes opening the account worthwhile.
Co-operative Bank – £150 cash
The Co-operative Bank offers customers a huge £150 switching incentive for new current account customers.
Customers must complete the switch using (CASS) which means closing your existing account. At least four direct debits must then be set up to qualify.
Account holders who sign up for Everyday Rewards can also earn up to £5.50 every month. To qualify, customers must pay in £800 per month, stay in credit and log in to online banking or the mobile app once a month. They must also opt for paperless statements and make sure four direct debits are kept active. This will earn you £4 per month.
If all the above criteria is met, the bank will also give you 5p every time you use your debit card to the maximum of £1.50 per month. Including the £150 cash incentive, customers could earn £216 in 12 months.
Offer ends: There is no end date currently stated but Co-op Bank says this is not a permanent offer and can be withdrawn anytime
First Direct 1st Account – £100 cash
First Direct has been offering a cash incentive since 1991, and was one of the first banks to do so. It is currently offering £100 to those who switch to its 1st current account. You will not receive the cash incentive if you have held a First Direct account in the past.
The internet and telephone banking offshoot of HSBC has a reputation for great customer service. Our own poll conducted last August backed this up, with 26pc of more than 1,000 Telegraph Money readers saying it beat 13 other banks for customer service.
This, along with its £100 cash offering, makes the current account an attractive option for those looking to switch. Bear in mind that to qualify for the £100 you must transfer your everyday banking to First Direct using the industry-wide CASS. You must also pay in at least £1,000 within three months.
The account costs £10 a month but this fee is waived for the first six months if you pay in £1,000 a month, maintain a monthly balance of £1,000 or hold another selected First Direct account.
If you’re not happy with First Direct, it promises to pay another £100 if you leave after six months but before a year.
Offer ends: There is no end date for the £100 offer but First Direct have offered higher incentives of £125 and £150 in the past. If you are not desperate to switch, it may be worth hanging on
M&S Current Account – £100 M&S gift card and up to £120 if you stay
M&S Bank’s current account, launched last May and branded a “major challenger to the dominant high street banks”, has no monthly fee and a £100 interest-free overdraft, and comes with a £100 M&S gift card.
For every month you pay in £1,000, M&S adds an extra £10 to the gift card as long as you keep two direct debits active.
The current account, despite not paying any interest to those in credit, is a decent account and perfect for loyal M&S shoppers.
Not only will account holders be given a gift card, but they will also receive one loyalty point for every £1 spent using the debit card in store or online.
For every 100 points earned, customers receive £1 in M&S vouchers, which are sent to the account holder each quarter. Plus, account holders get access to the M&S monthly saver which pays 6pc on a maximum pay-in of £250 a month.
Offer ends: No current end date
Halifax Current Account – £100 cash
Halifax has recently increased its cash incentive to £100 to those who switch to one of its current accounts. Plus, it promises to pay within three days of the completed switch.
Customers can earn a further £5 a month with the Reward Current Account. A minimum sum of £750 must be paid in per month and two direct debits must be set up.
Halifax’s two other current accounts are less attractive. The current account is basic and offers no reward. Halifax’s packaged account – Ultimate Reward Current Account – offers comprehensive worldwide travel cover and mobile phone insurance, but charges £15 a month. Customers can get this down to £10 if they pay in £750 a month and set up two direct debits.
Offer ends: No current end date for the £100 offer. However, like First Direct, Halifax has been known to offer a higher incentive
The banks that offer non-cash incentives
There are a number of high interest current accounts available that pay up to 5pc interest.
Nationwide’s FlexDirect account pays 5pc on balances up to £2,500 and TSB’s Classic Plus account offers the same rate on deposits up to £2,000. Despite the recent cut to Bank Rate, both providers say they have no plans to make changes to the accounts at this time.
Lloyds’ Club Current Account is good for those who can pay in a minimum of £1,500 each month to avoid a monthly £5 fee. Account holders can earn up to 4pc interest on balances between £4,000 and £5,000 and have access to a £100 interest-free overdraft.
Lloyds, unlike other banks, offers some added perks for its customers. Account holders can choose from one of three “Lifestyle Benefit” options each year. These are an annual Gourmet Society membership, six Vue cinema tickets, or an annual magazine subscription from a selection of titles.
However, be warned – the Lloyds Group is currently reviewing its range of current accounts which also includes those offered by Halifax and Bank of Scotland as well as Lloyds Bank.
