Current account pays 3% cashback on bills

Fancy earning 3% tax-free cashback every time you fork out on household bills?


NatWest and RBS are launching a new ‘Reward’ current account on October 12 that offers exactly that, so let's take a closer look.

The basics

The brand new NatWest and RBS Reward current account offers 3% cashback on seven household bills, so long as you pay them by direct debit from the account.

These bills are:
- Council tax
- Electricity
- Gas
- Water
- Mobile phone
- Home phone
- TV 
- Broadband

So, for example, if you spent £200 a month on all these bills combined, you’d pocket £6 a month in cashback. There is no limit on the amount of cashback you can earn.

There is no interest paid on the account and it has a £3 monthly fee. That means you have to spend a minimum of £100 on the above bills each month if you want to end up in profit.

Spend £100 or less and the £3 fee effectively cancels out any cashback you’ve earned.

According to NatWest, customers can earn £90 a year on average, net of the £3 fee.

You can cash in your ‘Rewards’ once you’ve earned £5. They can either be exchanged for cash, or you can trade them for shopping vouchers or donate them to charity.

You don’t have to pay in a minimum amount each month to open this account.

Is this for you?

That depends on how much you spend on household bills each month.

According to calculations by MoneySavingExpert, you’d need to spend at least £270 a month on bills to earn more from the Reward account than you would from the Halifax, Santander or Barclays current accounts once fees are factored in.

If you do have steep monthly outgoings, however, then this account could be a good option, especially as you can earn unlimited cashback.

It’s also likely to suit you if your income fluctuates, perhaps because you are self-employed, and you can’t pay in the minimum required by alternative accounts.

What makes it special?

The fact you don’t have to commit to paying in a certain amount every month means this account is accessible even if you don’t earn a set amount each month.

You also don’t need to set up a certain number of direct debits to be eligible, although all the bills you can earn cashback on must be paid this way.

Another thing that makes this account special is the fact that there is no cap on the amount of cashback you can earn, so the more you spend, the more cashback you get.

Watch out for

While the thought of earning cashback might be appealing, if you tend to keep a relatively high balance in your current account, you might be better off going for a current account paying high interest instead.

It’s also worth bearing in mind that this account doesn’t offer any switching incentives, whereas other accounts pay up to £150 if you move to them.

The £3 monthly fee is also a big drawback, and could wipe out all your cashback if your outgoings are small.

According to calculations by MoneySavingExpert, you’d need to spend at least £270 a month on bills to earn more from the Reward account than you would from the Halifax, Santander or Barclays current accounts once fees are factored in

What else is worth a look?

If you want a current account that pays you cashback, then Santander’s 123 account is worth considering too.

You earn 1% cashback on any Santander mortgage payments (up to £1,000 a month) that come out of the 123 account, and on your council tax and water bills. The cashback rate rises to 2% on energy bills and 3% on your mobile, home phone, broadband and paid-for TV bills.

The 123 account also pays decent returns when you’re in credit. You’ll earn 1.00% AER (variable) if your balance is £1,000 or more, rising to 2.00% AER (variable) if you have £2,000 or more in your account. The rate increases to 3.00% AER (variable) if your balance is between £3,000 and £20,000.

The downside of the Santander account is that you must pay in £500 or more a month and have at least two direct debits set up on the account. Plus, from next January, the monthly fee is increasing from £2 to £5 for both new and existing customers.

Halifax’s Reward account is also worth a look. While it doesn’t pay cashback, you get a £5 reward every month you pay in £750 a month, pay out two direct debits and stay in credit.

Start your switch to the Halifax account by October 18 and you’ll also get a £125 switching bonus.

You may also want to consider accounts that pay generous returns when you’re in credit, rather than cashback.

TSB’s 555 Classic Plus Account, for example, pays 5.00% AER (variable) on balances up to £2,000 and 5% cashback on your first £100 of contactless payments each month until the end of 2016. You must pay in £500 or more a month and register for online banking, paperless statements and paperless correspondence.

You'll also get £125 if you switch to the TSB account exclusively through MoneySuperMarket by November 23. You must pay in £500 or more within 28 days of switching and have at least two direct debits on the account.

The TSB account also offers access to a monthly saver account paying 5.00% AER fixed for 12 months. (After that the account converts to an Easy Saver account paying 0.75% AER (variable), including a fixed bonus of 0.55% AER for 12 months.)

Alternatively, Nationwide’s FlexDirect account also pays 5.00% AER fixed for 12 months on balances up to £2,500 AND you’ll get a £100 bonus for switching if you switch through MoneySuperMarket.

You must pay in at least £1,000 a month and after 12 months, the rate falls to 1.00% AER (variable).

Further T&Cs apply to all switching offers.

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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