The best bank accounts for cashback

A host of banks have announced significant changes to cashback schemes on offer with their current accounts

We regularly write about the benefits of using cashback credit cards wisely but not everyone likes using a credit card to pay for their spending.  

If you prefer to manage your money with a debit card, you can still earn some extra cash by moving to the right current account.

We'll take a look at some of the top cashback current account offers available right now, but first we wanted to highlight some big changes to two of the most popular options on the market.

Earn more cashback - if you qualify

Halifax has confirmed it is changing the cashback rewards on offer from its Reward account from June, which means that account holders will enjoy bigger rewards, though will have to jump through more hoops in order to qualify.

It's just one of a handful of banks that have changed their cashback offers of late, while one challenger bank has unveiled a brand new offer to entice customers.

So let's dive straight in and see what's changing.

Halifax

Halifax is revamping its Reward account from 1 June.

Currently account holders can enjoy £2 cashback each month, so long as they remain in credit, pay in at least £750 and pay out at least two direct debits from the account.

The changes mean the account will be more generous, but include more restrictive terms.

From 1 June account holders will be able to enjoy either £5 a month cashback, or pick one of a range of monthly ‘lifestyle’ rewards, which range from digital subscriptions to certain magazines (including the likes of Elle and Men’s Health) to digital film rentals and cinema tickets.

You pick what sort of reward you want, this is set for a 12-month period. As a result, you can’t alternate between the cashback and issues of Cosmopolitan.

However, there are extra conditions to be aware of. For example, there will be a £3 monthly fee unless you pay in upwards of £1,500 a month.

What’s more, you’ll only get those rewards if you pay in at least £1,500 a month, stay in credit and either maintain a balance of above £5,000 or make payments worth £500 with your debit card.

If you already have a Reward account, you have until 15 May to decide if you want to sign up to the new version. Otherwise you’ll be automatically moved onto a less rewarding, but fee-free alternative.

Halifax also offers access to a scheme called Cashback Extras, allowing you to earn up to 15% cashback when you shop at certain retailers using your debit or credit card, in store or online.

The offer applies to the Basic, Student, Reward and Ultimate Reward current accounts.

Santander 123

The Santander 123 Current Account lets you earn up to 3% cashback on specific household bills.

There are effectively three tiers: you get 1% on water and Council Tax bills, as well as the first £1,000 you pay towards your Santander residential mortgage (so up to £10 a month).

You also earn 2% cashback on gas and electricity bills as well as Santander home insurance and life protection premiums, while you get 3% back on mobile, home phone, broadband and paid-TV contracts.

While these rates remain unaffected, from May 5 the maximum amount you can earn will be capped at £5 per tier, meaning a maximum benefit of £15 a month.

The change will obviously hit those with sizeable monthly bills the hardest – especially those with a Santander mortgage who can currently earn up to £10 a month on that alone.

That would be bad enough, but the bank has also announced it is cutting the rate you can earn on balances up to £20,000 from 1.5% to just 1%, meaning you'll earn £100 less interest every year on the maximum balance.

Given that there are a number of access savings accounts out there paying between 1.3% and 1.4% (all of which allow you to hold larger balances to boot), there isn't really much point holding your cash in the Santander 123 account come May.

Throw in the fact that the account charges a £5 monthly fee, and it's hard to make a case for it.

If you are still keen, note that you must pay in at least £500 a month and set up at least two Direct Debits to qualify – although you'll probably want to set up most of your eligible bills to earn cashback on them.

But before you do apply, you should definitely take a look at Santander's cheaper alternative...

Santander 123 Lite

The Santander 123 Lite Current Account offers the same cashback rates as the 123 account above, but only charges a £1 monthly fee.

The key difference is that it doesn't offer the savings incentive on balances of up to £20,000 but, as you can get a better rate on your savings elsewhere, that's not really an issue.

So it has all the same cashback incentives for a fifth of the price.

To qualify for the perks, you need to pay in at least £500 a month, have two active Direct Debits and log in to online or mobile banking at least once every three months.

Lloyds Bank

Lloyds Bank offers customers with a Club Lloyds, Classic, Student or Basic account access to the Everyday Offers cashback scheme.

It allows users to earn up to 15% cashback when they shop at certain retailers using a debit or credit card, in store or online.

Lloyds Bank, Halifax and Bank of Scotland launch Direct Debit cashback offers

Club Lloyds offers 1% interest on balances of up to £4,000 and the choice of either six cinema tickets, an annual magazine subscription or an annual Gourmet Society membership, as well as Everyday Offers.

You’ll have to pay £3 a month if you pay in less than £1,500 a month.

Lloyds sign. (Image: Shutterstock)

 

Revolut

The mobile challenger bank Revolut has added ‘perks’ to its current account offering, providing users with discounts or cashback when they shop with certain partner retailers.

To start with, it’s offering three perk offers which are instantly available to customers, with Trainline (up to 10% cashback), National Express (20% discount) and Hello Fresh (£60 discount and £3 cashback).

After this, new perks will be ‘unlocked’ after every ten purchases with your Revolut card. The perks have time limits, but you’ll be sent notifications to let you know when the perk becomes available. 

Revolut said it has already partnered with Amazon and TUI among others for future perks.

Perks are a free bonus for account holders, so won’t cost you anything extra.

 

NatWest branch. (Image: Shutterstock)

NatWest and RBS Reward

NatWest and RBS operate three accounts which hand customers back some money.

With the Rewards account, you’ll get £4 a month back so long as you have two or more Direct Debits, with a further £1 back so long as you log into the mobile app at least once a month. You can then earn a further 1% back when you spend with certain partner retailers like Caffe Nero and P&O Ferries. The account will set you back a fee of £2 a month though.

After that there’s the Reward Silver account, which costs £10 a month. You can earn the same £5 a month in cashback, but there are also further benefits included with the account like mobile phone insurance, European travel insurance, cinema discounts and fee-free purchases overseas.

Finally there’s the Reward Platinum, which includes all of the above plus worldwide travel insurance and breakdown cover. It will cost you £20 a month though.

An important extra consideration with NatWest and RBS is that switching your account to them using the Current Account Switch Service currently means you can pocket a whopping £175 as a welcome bonus.

Co-operative Bank

Co-operative Bank operates an Everyday Rewards scheme across a handful of its accounts,  but it’s being revamped to be less generous.

Currently the scheme allows users to earn up to £5.50 a month, though from June this is dropping down to £5 a month.

This is a bigger chance than it first appears to, given the banking actions you need to carry out in order to earn that cashback. Currently you get £4 a month so long as you pay in at least £800 each month, stay in credit, opt for paperless statements, log into online banking at least once a month and have a minimum of four Direct Debits. This is being changed to £2 a month so long as you meet those conditions.

The remainder of the cashback is earned through debit card use, with 5p paid per debit card transaction, up to a current maximum of £1.50 a month ‒ a total of 30 transactions.

But from June in order to get the full cashback reward, you will need to make 60 transactions in order to accrue the maximum £3 in cashback.

The Rewards scheme is available on Co-op Bank’s Current Account, Everyday Extra Account, Current Account Plus, Privilege Account and Privilege Premier Account. You can opt to keep the cashback yourself or donate it to charity.

Barclays

The Barclays Bank Account with Blue Rewards is also worth considering.

Providing you are a current account customer aged 18 or over, deposit £800 a month, have two Direct Debits, and sign up to online or mobile banking, you'll be paid £7 a month.

There’s a £4 a month fee, so you'll actually only pocket £3 a month.

If you have a Barclays mortgage, you'll get an extra £5 a month and with home or contents insurance, you can get up to an extra £3.

Getting other financial products from your main bank can often be a false economy, so you need to be sure that your deal is a good one excluding any cashback benefit.

Compare current accounts

This article is regularly updated

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