What to consider when choosing a reward account
Current accounts that reward customers — with perks such as cashback when making certain purchases — can be a useful way of bolstering your bank balance.
There are several deals available, such as Barclays blue rewards, NatWest/RBS’ reward account, Santander’s 123 account options, Co-op Bank’s everyday rewards and Halifax’s reward current account — but how do you choose the right one for you?
Katie Brain, at star ratings business Defaqto, says it’s worth bearing in mind that while the potential rewards on offer can vary, so can the terms and conditions of individual accounts.
You may need to pay a minimum amount into the account each month, for example, and any account fees will also need to be weighed up to work out whether a deal is worthwhile for your needs.
To reap even more benefits from some accounts, this could mean holding certain other financial products with the same provider.
For example, Barclays’ blue rewards gives customers up to £7 a month for using their account — £3.50 for each of the first two direct debits they pay. They can also get extras such as £5 a month for having a Barclays mortgage and up to £3 per month for home insurance.
Also, look out for any ‘cash for switching’ current account. For example, NatWest is offering £175 to switch by April 2, 2020. RBS is also offering £175 to switch by April 20.
Make sure you keep an eye out for any announcements about changes to the perks on offer too. Santander recently announced plans to cap the cashback amounts it offers on its 123 account at £15 per month. Santander’s 123 account interest rate will also fall from 1.5% to 1% from May.
“Anyone looking to apply for one of these accounts should check the terms and conditions associated with any reward or cashback scheme before applying,” says Brain.
“And be mindful of any monthly charge associated with the account as this will eat into any reward earned.”