Current accounts: customers seek better switching bonuses

People are not moving to new banks because the cash incentives for switching are too small, according to research from MoneySuperMarket.

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We looked at recent enquiries about current accounts on our website and found that one in five people looking to switch current accounts want an upfront cash incentive, with £182 the desired amount people are looking for when changing banks.

This figure is a hefty £32 higher than the leading current account offers, First Direct 1st account and Clydesdale and Yorkshire Bank’s Current Account Direct, both offering £150 to new customers.

Tipping the balance

We dug a little deeper into the data and found that the older you are the bigger the incentive you’re looking for.

Those aged 55 and over who haven’t changed their current account in the last two years stated they typically needed £197 to switch, while 35- 54 year-olds said they would be happy with £180.

The youngest age group, 18-34 year olds, cited £169 as the amount they would need as a cash incentive for switching.

7 day switch

Irrespective of your age, switching your current account isn’t as daunting or time consuming as many think. Since 2013, banks and building societies must complete the switching process in seven working days.

You simply tell your chosen bank that you want to switch to them, and they do the rest.

This is also known as the current account switch guarantee. It ensures that all your standing orders, direct debits, incoming and outgoing payments will be transferred over within the seven working days timeframe.

This is guaranteed for 36 months to ensure any annual payments are also incorporated. And if anything does go wrong or awry, you will be compensated for any lost interest, fees or charges incurred as a result.

For more information on current account switching, check out our snapshot video below.

Review all benefits on offer

While big cash incentives can be tempting when shopping for a new current account, it’s worth looking at the total benefits on offer from each provider.

While some banks don’t offer cash incentives when signing up the potential cashback, if used effectively, could surpass that of the cash bonus offered by other banks and building societies.

For example, the Halifax Reward Current Account can earn you up to £185 a year and the Santander 123 current account has a tiered cashback structure meaning you can earn 3% on mobile and broadband bills, 2% on energy bills and 1% on Santander mortgage repayments. 

The fee attached to Santander’s 123 will increase from £2 a month to £5 a month from January 2016. Find out here if the fee changes affect your suitability to the account.

Kevin Mountford, banking expert at MoneySuperMarket, said: “While a higher upfront cash incentive could be a real driving force behind account switching, consumers should bear in mind that the fruits of being on the best account for their circumstances could be even more plentiful.

“Our advice to consumers is to make sure they aren’t blinded by a big cash figure, and consider all the other benefits before deciding which account would be the best fit.

“In some cases, accounts which pay a high rate of interest, or those that have particularly useful features and rewards packages, could end up saving you the most money, even if they don’t pay on switching.”

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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