Focus on: Give and take by switching to Co-op Bank

Dogged by scandals surrounding its former chairman, Paul Flowers and a £1.5billion black hole in its finances last year, the Co-operative Bank is now looking to win back favour by tempting new customers with £100 cash and a £25 donation to a charity of their choice when they join.

Are the incentives worth switching for? Here’s a closer look at the bank’s new offer.

What’s the deal?

Open a Co-operative Bank Standard Current Account, Current Account Plus or Smile current account and you will receive £100. What’s more, you’ll get £25 to donate to one of seven charities. You can choose from Action Aid, Amnesty International, Carers Trust, Help the Hospices, Oxfam, Water Aid and the Woodland Trust.

The Standard Current Account offers online banking and a mobile app, a contactless debit card and access to exclusive loans and cash ISA offers. 

Current Account Plus offers a £200 fee-free overdraft (debit interest applies), an instant-access savings account (opened automatically and currently paying 0.50% AER), and access to exclusive loans, credit cards and cash ISA deals. Account holders must pay in at least £800 a month.

Finally, the smile Current Account offers a £500 fee-free overdraft (debit interest applies), online banking and a mobile app, a contactless debit card and access to exclusive loans and cash ISA offers.

Who is it good for?

Anyone who’s looking for a good incentive to switch to a new current account provider, wants a range of accounts to choose from, and likes the idea of giving something to charity, for free.

Any catches?

To qualify for the £125 switching offer, new customers must credit £800 to the new account within 31 days of opening it.

What’s the verdict?

The £100 cash incentive on offer is competitive, matching that of the First Direct 1st account and the Halifax Current AccountReward Current Account and Ultimate Reward Current Account. Elsewhere, Nationwide’s new Refer a Friend scheme offers you and a friend £50 each when you convince them to switch.

The Co-op’s £25 charity donation is a good sweetener – but it’s the current account details you really need to look at.

There are three accounts to choose from, none of which have a monthly fee and two of which come with a limited, fee-free overdraft. There are current accounts with more competitive overdraft facilities out there, as detailed in my feature Best banks if you’re overdrawn.

While the Current Account Plus does come with an automatic instant access savings account, the rate tracks 0.5% below the Bank of England base rate, which isn’t very competitive. However, account holders get access to the Co-operative Bank’s fixed-rate cash ISA paying a competitive 2.20% AER, fixed until January 2016.

The bank itself scores highly for customer service, and was voted Best High Street Bank in the latest UK Customer Satisfaction Index by the Institute of Customer Service.

Kevin Mountford, head of banking at MoneySuperMarket, said: “It is good to see Co-operative Bank looking to compete in the current account space after its publicised troubles. Traditionally, alongside Nationwide Building Society, they have been seen as the white knights of the industry. While a cash incentive to attract new customers is nothing new, the charitable donation is new and may help attract new customers who are looking to switch.”

Top tip!

Thanks to the current account switch service, you can now switch to a new current account in seven working days, and all your direct debits and standing orders will go with you. What’s more, a 13-month redirect to all payments sent to or requested from your old account means you won’t miss any payments.

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