Make a mint from your current account

by Szu Ping Chan on 05 August 2009  |  8 comments
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One banking Goliath is giving you the chance to earn 6% on your cash, twice over. We round up the goodies on offer when switching accounts.

Loyalty is a hard thing to come by in today's banking world. With providers launching new best buys all the time, we've become a nation of credit card and savings tarts, always looking for the best rates.

But when it comes to current accounts, it's a slightly different story. As we discovered in a recent survey of Britain's worst bank, when it comes to our trusty current accounts, good service is valued even over a cash incentive.

That hasn't stopped many banks from trying to hook us in, and there have been a raft of providers offering £50 and £100 incentives to try to get you to switch.

But you have to be quick off the mark if you want to bag the incentive. Just last week, Nationwide pulled its £50 offer to switch to them, and Alliance and Leicester's £100 incentive came back earlier this year, only to disappear soon after.

Of course, these banks were not the first to offer an incentive to switch, and nor will they be the last.

Here are some incentives up for grabs at the moment:

As you can see, banks are queuing up with all manner of treats to get you to bank with them. But which is the best?

If you're fortunate enough to have oodles of cash, Abbey's Preferred In-Credit current account and Allianec & Leicester's Premier Direct account win hands down.

Santander, which owns Abbey, Alliance & Leicester and the savings arm of Bradford and Bingley has launched yet another onslaught on the current account market.

With Abbey's Preferred In-Credit current account and Allilance & Leicester's Premier Direct account, you already get up to 6% on credit balances up to £2,500 for the first year. But these deals recently got sweeter, as both banks launched exclusive regular saver accounts, which also pay 6%.

The catch is, you're only eligible for these sexy savings accounts if you open a current account. Existing current account holders and savers who aren't prepared to switch current accounts will miss out. 

Still, it's a good deal. Not only can you earn 6% on cash in your current account, but you can maximise your earnings potential by pouring any amounts above the £2,500 current account threshold into the regular savings account.

Abbey lets you deposit anything from £20 to £250 in its Super Fixed Rate Monthly Saver account, while you can deposit amounts from £10 to £250 in A&L's Premier Regular Saver.

If you switch to Abbey or A&L, you'll make £120 as a basic rate taxpayer, as long as you keep an average balance of £2,500 throughout the year. You'd also get £77.44 in interest if you managed to stash the full £250 a month into the regular saver.

Combine the two, and you'd be nearly £200 richer by the end of the year.

But remember, this is the maximum you could earn. To earn this much, you'll have to be disciplined enough to keep a consistent balance of £2,500 in your current account, and also save £250 a month. Can you afford that? If not, you may find the interest you receive is not worth the hassle of switching current accounts.

Think about how you manage your finances before you switch. For regular overdraft users, the Alliance and Leicester Premier account is a better option, as you can take advantage of the 0% interest for a year, and benefit from free European travel insurance.

Cold, hard cash

If it's a cash incentive you're after, then I'm afraid you'll have to settle for no credit interest.

Two providers, Halifax and First Direct pay no interest on credit balances, but will give you a reward for banking with them.

The Halifax Reward current account pays you £5 a month, as long as you pay in at least £1,000 in each month. Plus, the offer doesn't stop after a year, so you can enjoy a £60 bonus for as long as Halifax decides to keep the offer going!

Finally, consumer champion First Direct, which came top of our banking survey is offering £100 if you switch your account to them. The account sets some high benchmarks though, and if you want to apply, you'll need to earn £23,500 (before any student loan deductions) to qualify for the cash.

First Direct has received praise from our readers time and time again, which is hard to ignore. Plus, they are so confident you'll like them, that if you leave after 6 months, they'll give you another £100!

So, with so many incentives on offer, if you haven't switched current accounts in years - why not dive in and reap the rewards? It should, quite literally, pay off!

More: The vicious current account trap / A cunning way to get 6% on your savings

Switch current accounts today!