Get cashback with your current account
Santander, Halifax and First Direct all offer cash incentives with their current accounts.
Banks are so keen to lure in current account customers that there is constantly an ever-changing array of incentives to encourage us to abandon our old account and start anew elsewhere.
At the moment, several banks are offering new customers cold hard cash if they switch. Others are now offering cashback if you use your account in a similar way to how some credit card providers offer cashback on purchases.
We look at the best offers out there and whether a cash incentive makes opening certain accounts worthwhile.
Cashback on direct debits
Some current accounts have been handing out straightforward cash to switch for some time, but Santander has decided to go down a different route and has started to offer cashback on direct debits instead.
With the Santander 123 Current Account you can earn tiered levels of cashback just for doing something as mundane as paying your household bills.
The account pays 1% cashback on water, council tax and Santander mortgage payments. You also get 2% cashback on both gas and electricity direct debits. Plus 3% cashback on communication bills you pay for things like your mobile phone or TV package subscription.
Cashback is paid into your account each month.
On top of this the Santander 123 Current Account also pays a market leading level of in-credit interest of up to 3%. The rate is so good it beats most savings accounts! Plus you get an interest-free arranged overdraft for four months when you switch using the dedicated Switcher Service.
To qualify, customers need to pay a monthly £2 fee, deposit at least £500 a month and set up at least two direct debits that fulfil the relevant criteria.
So in order to get up to 3% cashback and 3% credit interest every month you need to pay £24 a year. But if you have bills to pay, are likely to earn £500 or more a month plus have some savings that could be stashed in the account, then it could benefit you massively.
Be warned, however, your TV licence, maintenance contracts, insurance payments and any commercial bills do not count. Plus some suppliers are not accepted. Use this tool on the Santander website to check if your suppliers are eligible.
Also if you slip into the red, arranged overdrafts cost £1 a day capped at 20 days outside of the four month offer. While unarranged overdrafts cost £5 a day. Overdraft charges are capped at £95 a month but these costs could dwarf anything you may have earned through cashback or credit interest.
Cash lump sum
Of course as I've already mentioned, some providers offer cold hard cash for simply opening their current account.
First Direct offers new customers a £100 joining bonus if they open a 1st Account.
To qualify for the account fee-free you’ll need to pay in £1,500 a month; this equates to a pre-tax salary of about £22,750 or £23,810 if you have a student loan. Alternatively, you’ll need to have another First Direct product – such as insurance.
Fail to keep up the minimum monthly deposit and you’ll be hit with a £10 monthly fee – so make sure you pay in the minimum £1,500 each month or the £10 charges will soon wipe out the £125 opening bonus.
New 1st Account holders also get a £250 interest-free overdraft and are charged 15.9% AER above that – not the highest rate around but higher than some so this account is best for those who remain in credit pretty much all the time.
The good news is the 1st Account has won several awards for customer service, including our own Lovemoney Award, and in the unlikely event that you don’t like the bank and decide to leave after a year; it will pay you another £100.
Regular cash each month
Halifax now also offers a lump sum, this time of £100, to new customers who take out a Current Account, Reward Current Account or Ultimate Reward Current Account before the 3rd of March.
But if you chose to go for the Reward Current Account you can also get £5 every month when you pay in at least £1,000 – meaning you need to earn a pre-tax salary of around £14,000.
So that’s an extra £60 a year on top of the cash lump sum of £100, which unlike the 1st Account is paid as soon as you apply.
The good news is the period of time you’ll get the £5 a month for is currently indefinite – although Halifax reserves the right to change this at a later date if it chooses to. What’s more, you’ll get this whether you’re in-credit or overdrawn.
Another bonus with this account is that it comes with a 12-month interest-free arranged overdraft should you need it. Depending on your situation this could be up to £5,000.
That said, the charges on the account are pretty high – up to £3 a day on balances of £3,000 and above – if you take an unauthorised overdraft or one outside of the deal period, and will soon wipe out the monthly cash incentive. So you’ll be far better off if you stay in the black.
If you like the sound of these incentives and want to switch take a look at our step-by-step guide.