Focus on: Switch current account and get £200

Banks and building societies are bending over backwards to tempt customers to switch their current accounts, with the Co-operative Bank the latest to offer a cash incentive.

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The bank has announced that it will pay an impressive £200 to any new or existing customer switching their current account from another bank or building society – as long as they apply in a Co-operative Bank branch.

The move follows similar offers from First Direct and Santander, both of which provide cash incentives for new current account customers.

As the battle between the banks heats up we take a look at the Co-op offer and see how it stacks up against the other current account deals...

What’s the deal?

The £200 switching incentive is available to new customers switching to one of four different Co-operative Bank accounts: Current Account, Current Account Plus, Privilege or Privilege Premier Account.

Perhaps the most interesting of these is the Privilege Account, which is a packaged account offering a £200 interest-free overdraft, a low overdraft rate of 12.9% for larger borrowers, worldwide family travel insurance and access to linked mortgage and savings accounts.

There is a £9.50 a month fee, however, and no interest is paid on in-credit balances.

If you are looking for a fee-free account, the Current Account Plus, which has a £200 overdraft buffer and a borrowing rate of 15.9%, may be more up your street.

It requires monthly funding of at least £800.

Any catches?

To qualify you need to pay a minimum of £800 into your new account for the first three months, and you also need to switch at least two direct debits and standing orders from your existing provider. 

You must also use the bank’s dedicated switching service within 14 days of opening the account and apply in a branch rather than over the phone or online to be eligible to claim the cash. Get in there quick though – this is a limited offer and could be withdrawn at any time.

What are the alternatives?

While offers of free cash for switching are always tempting, you should make sure the account you are moving to is right for your needs.

Santander’s Preferred Account, which pays a massive 5% on balances of up to £2,500 and offers a 0% overdraft for the first 12 months, is currently at the top of the current account best buys table.

And customers who switch to this account at the moment also will receive from £100 up to £300.

The £300 switching incentive is for existing Santander mortgage customers who open a current account, provided they can deposit at least £10,000 in a Santander savings account as well.

Mortgage customers who do not want to open a savings account as well as a current account with Santander get £200, and anyone else who chooses to switch to a Santander current account will receive £100.

It is worth noting, however, that the credit interest rate on the Preferred account plunges to 1% after 12 months, after which point you will also start paying for any overdraft.

You must also pay in at least £1,000 a month to qualify.

The First Direct 1st Account, meanwhile, offers new customers a fixed £100 switching incentive.

Benefits of the account include a £250 interest-free overdraft buffer, a relatively low overdraft rate of 15.9% for amounts over and above £250 and the option of opening a linked regular saver account paying 8%.

It also offers a satisfaction guarantee under which the bank will give you another £100 if you choose to switch to a different provider after six months.

You must, however, pay in at least £1,500 a month to qualify for the account, while in-credit balances receive no interest at all.

Verdict

The Co-operative's switching incentive compares well with the ones from First Direct and Santander.

It beats First Direct hands down by offering double the £100 that First Direct pays.And while Santander pays up to £300, you need to have a mortgage with the bank and hold substantial savings with them to qualify for this amount.

The Co-operative Bank's offer, on the other hand, is open to all new current account customers who visit one of the bank’s branches to make the switch, whether or not they have any other of its products.

It is also worth knowing that, while its accounts may seem less attractive on paper than the Santander Preferred Account, for example, the Co-operative came fourth in the latest customer satisfaction survey from consumer champion Which?

Santander, by comparison, languishes at the bottom of the table with a score of just 39% for customer satisfaction.

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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