Bank steps up to the competition with cash rewards for current account holders.
Barclays has launched a new rewards programme for current account customers, dubbed ‘Blue Rewards’.
For a £3 monthly fee, it will pay those that sign up fixed cash bonuses of up to £15 a month, giving them the chance to earn net rewards of up to £144 a year.
The scheme launches on 20th April. Barclays claims it will offer the best monthly rewards for more UK workers on an average salary than any other current account provider.
That’s fighting talk from a bank which according to the latest switching figures lost over 22,000 current account customers in the second quarter of 2014, more than any other bank or building society.
So will Blue Rewards be enough to tempt people back and encourage existing customers to stay?
How Blue Rewards works
Blue Rewards is available to all new or existing Barclays current account holders apart from those with Cash Card, Young Person’s, BarclaysPlus, Wealth & Foreign Currency or Business accounts.
To qualify for the scheme you have to be aged 18 or over, deposit £800 a month, have two direct debits set up, sign up to online banking or the Barclays mobile banking app and oddly agree to pay a £3 monthly fee.
Each month you will receive a £7 cash reward just for being a current account customer, which will be a £4 gain overall.
The scheme will also pay fixed cash rewards based on other products current account customers hold with Barclays, which for now is limited to two types of deal.
Barclays residential mortgage customers will receive £5 a month for the term of their mortgage, while home insurance customers (including buildings, contents, combined or Finer Home cover) will receive £3 a month for as long as they hold a policy with the bank.
However Barclays says this initial offering will be expanded, with cash rewards added for other Barclays products such as savings and personal loans in the near future.
Blue Rewards will also provide enhanced cashback through Barclays’ SmartSpend scheme which allows you to earn when you spend online with selected retailers.
All the rewards you earn will be paid into a digital wallet which can be redeemed at any time into your Barclays current account.
How Barclays compares
Blue Rewards only really makes sense if you have or are intending to take out more than one Barclays product and once more products are included it will certainly be a rewarding scheme.
But switching to and using the current account alone will earn you just £48 a year, which simply isn’t as good as what you’ll get with other current accounts that come with switching incentives and/or in-credit interest.
The Halifax Reward account, for example, will pay you £5 each month to that you deposit £750, have two direct debits set up and stay in credit. So you’ll get £12 a year more for a smaller minimum monthly funding requirement. Those that switch to the account will also get £100 in cash, so you could pocket £160 in your first year. The account also offers Cashback Extras, which allow you to earn cashback when you shop with selected partners online.
Clydesdale Bank is another place you could get a better deal. It’s offering £150 when you switch to any of its current accounts, maintain two direct debits and pay in £1,000 a month. With the Current Account Direct you can also earn 2% on balances up to £3,000.
Nationwide’s Flex Direct Account doesn’t come with a switching bonus but it offers a market-leading 5% credit interest on balances up to £2,500; however this is only for 12 months and you’ll need to deposit £1,000 a month. TSB on the other hand pays 5% on balances up to £2,000 as long as you pay in £500 a month and register for internet banking with its Classic Plus account.
The Club Lloyds Account pays 4% on balances from £4,000 up to £5,000 as long as you pay two direct debits from the account and it also comes with the choice of one free lifestyle benefit each year. You’ll need to pay in £1,500 a month to avoid a £5 monthly fee though.
Elsewhere the Santander 123 Current Account pays 3% on balances from £3,000 up to £20,000 as well as up to 3% cashback on certain household bills. It also offers cashback on spending in-store and online at selected partners through its Retailer Offers scheme. However, the account attracts a £2 monthly fee.
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