Since I found out about current account switching, I've clocked up over £500.00 in cash! In this post, I write about the benefits of reward bank accounts and how I've 'earned' a few hundred pounds from the banks.
Choosing a reward account for your everyday banking means you are offered perks in the form of: cash back on spending, interest payments on your monthly bank balance, insurance (travel, car, home or mobile), free cinema tickets, free magazine memberships and other perks.
The Extra Good
In addition to the ongoing benefits of a reward bank account, there are times when banks will offer a switching bonus. This is where the bank will offer you straight cash for closing your current bank account and moving to a new provider.
In the UK, this is done through the switching service. How does this work? When you apply for a new bank account, you will be asked if you want to switch your current bank account using the 'switching' service. You say yes and provide you current bank details. Pick a date and tell the bank when you want the 'switching' to happen, within 7 days of the date you pick, all your payments, in and out, direct debits and standing orders will be moved on your behalf. So basically you do nothing.
If your willing to play the switching game, you could make a couple of £100.00 a year. In fact I opened a bank account specifically for this purpose. September 2017 I switched my HSBC account to First Direct, I got paid a £125.00 switching bonus. A month later, I switched my First Direct account to Clydesdale bank, I got paid a £250.00 switching bonus. April 2018, I switched my Natwest current account to the Reward Natwest account, result? Another £125.00. I made an extra £500.00 for a total of 15mins work (if you apply online). And finally in December 2018, I shared a £200.00 payment from Nationwide's refer a friend scheme.
Applications for reward bank accounts will include a credit check or hard pull on your credit report. In most cases a hard pull on your credit report will take points off your credit score. Therefore I would avoid applying for a reward account if you’re close to applying for a mortgage for example.
To get the perks which come with a reward account, you need to meet the monthly requirements set out by the provider. Common requirements include setting up direct debits, monthly account paying-ins usually ranging from £500.00 - £1,500. And sometimes a monthly fee. The fee is usually waived if you meet the monthly pay-in. My source for current switching promotions is the MoneySavingExpert website.