When to chase a switching bonus
Changing bank accounts is straightforward, but it is not always worth the money on offer
It’s time to consider moving to a new bank. Last week Santander launched a new switching bonus for people who move their current account to them. New and existing customers can get a £185 switching bonus if they move their main bank account to Santander’s Edge, Edge Up or Private current accounts. But are the Santander accounts worth switching to? If you want the £185 bonus, then the Edge account is the one to go for. It has a £3 monthly fee but in return you get 1% cashback on energy, council tax, broadband, TV, mobile and water bills, up to a maximum of £10 a month. Then you get another 1% back on spending at supermarkets, on fuel and trains, again capped at £10 a month. The account also comes with a linked saver that pays 7% interest on up to £4,000 in the first year. So spend £36 in fees and you could get up to £480 back in interest and cashback on top of the £185 switching bonus.
The bonus is unusual in that existing Santander customers who move their main account to either the Edge, Edge Up or Private account can claim the £185, as well as new customers.
The only difference is that existing customers will have to go to a branch to switch and get the money, whereas new customers can apply online. The only people who can’t claim the bonus are Santander customers who have already received a switching bonus.
To secure the bonus you will need to complete a full move with the Current Account Switch Service (CASS) within 60 days, including closing your old account. You will also need to pay in at least £1,500 within 60 days, but this doesn’t have to be in one payment. There will also need to be two active direct debits on the account, and these can’t be simply funding other Santander, Cahoot or Cater Allen savings accounts.
Jumping through hoops
If you fancy more money – and who doesn’t? – then NatWest and Royal Bank of Scotland are offering a £200 switching bonus if you move to one of their current accounts. Open a NatWest Reward or RBS Reward account and you will also receive £5 every month when you use the banking app and pay out two direct debits of at least £2. But these accounts have a £2 monthly fee. Alternatively, you can switch to their fee-free Select accounts. With any of the RBS or NatWest accounts you can open a linked regular saver account paying 6.17% interest. Another option is HSBC, where you could get up to a £220 bonus, but you’ll have to jump through some hoops. First you need to switch to either HSBC’s UK Advance or Premier account with CASS. The switch must include at least two direct debits and standing orders and you need to pay in at least £1,500 within 60 days and register and log in to mobile banking.
On top of that – HSBC are going to really make you earn that bonus – you need to make at least 20 transactions with your HSBC debit card and open and deposit at least £50 into HSBC’s Online Bonus Saver. Do all that and you’ll get a £100 switching bonus. To get the other £120 you earn £10 a month by logging into mobile banking, paying in £1,500, using your debit card at least 20 times, deposit £50 into the linked savings account and keep the direct debits active. It’s a lot of work for the cashback, so you may be better off taking the upfront, albeit slightly lower, offers from NatWest or Santander. Switching current accounts is straightforward with CASS. All you do is apply for your new account and give them the details of the bank and bank account you are moving from. Your switch should be completed within seven days, with all your direct debits and standing orders moved for you.
Your new bank will also make sure payees are informed of your new bank details and any payments made into your old account will automatically be forwarded to your new one. Before you chase a switching bonus, make sure you consider the perks you have with your existing bank account and whether you will be able to match that at your new bank. For example, if you are using your overdraft will your new bank match, or beat, the interest you are currently paying and give you a big enough overdraft facility?