What are cashback current accounts?
Cashback current accounts gift you a money incentive when you switch your main bank account from your current bank and open a new current account with a new provider.
The amount of cashback you earn will depend on the switch offer.
Cashback current accounts may also offer you the chance to earn cashback on your household bill direct debits.
How do cashback current accounts work?
There are a few things you need to do to earn cashback on your new current account:
- You’ll usually have to pay in a certain amount by a certain date - this could be made up of one lump sum payment or multiple smaller payments
- You’ll need to apply for the new account within the deal period
- You’ll then need to complete the switch by a certain date
- You may also need to switch over at least two direct debits
How do you get your cashback switch offer?
Once you’ve met the eligibility criteria the bank will automatically credit your account with the switch amount offered within a set number of days.
Current Account Switch Guarantee
The Current Account Switch Guarantee makes switching current accounts easy by promising:
- The current account switch service will be free for you to use and you can choose your switch date
- Your regular incoming payments (your salary, for example) and outgoing payments (direct debits, for example) are moved over
- Any money in your current account is transferred to your new account on switch day
- Any payments made to your old account are automatically redirected to your new account – and your payee will be sent your new bank details
- You’ll be told if there are any issues with the switch before switch day
- If there are any delays with the switch then your new bank will cover any interest charged or lost, and any late payment fees you’re charged on either the old account or your new account
Things to keep in mind…
If you’re thinking about switching current accounts to make the most of a cashback offer, there are a few things to keep in mind.
- Your new bank may say you’ll need to pay in a minimum amount each month to qualify for the cashback deal. If you aren’t able to pay in this amount each month then you may need to pay a monthly fee
- A cashback account may not offer the best features for your money management needs. For example, you may value having an overdraft buffer in case you go over your limit some months, but a new account offering cashback may not offer an overdraft. So it’s a good idea to think about which banking features are important to you and would help you manage your money better
- You most likely won’t be eligible for the cashback offer if you’ve already used the cashback incentive to switch to that bank in the past
- If you’re switching a joint bank account then you’ll only receive one cashback payment
Is cashback on current accounts taxable?
Any cashback you earn when you switch current accounts or make direct debit payments on your household bills is considered a ‘discount’ rather than interest or income – so it isn’t taxable.
Comparing cashback current accounts
Comparing cashback current accounts can help you find the right bank account for your money management needs. MoneySuperMarket lists and sorts current accounts that offer a switch incentive by switch incentive size, overdraft, interest, customer service score, digital bank rating and brand to help you compare.
You can also compare any rewards offered with each switch deal, plus any terms and conditions you’ll need to meet to qualify for the switch offer.