The reason for the rise in switching is two-fold. First, there’s been an increased awareness around the Current Account Switch Service, which was introduced in September 2013 by the Payments Council to make moving banks quicker, easier and less open to error. Nearly three-quarters (71%) of people are now aware of the service, co mpared to 51% when it first launched.
Second, banks and building societies have been stocking their shelves with some really cracking current account deals that would motivate even the most cautious customers to up sticks and switch.
Here we’re going to look at one of these – the Halifax Reward account, which made a return to the market with its current bells and whistles, just last week.
What’s the deal?
The Halifax Reward account will pay you £125 cashback for switching – so long as you shut down your last account behind you.
Once you’re all set up, while this account won’t pay you interest, you’ll earn a £5 ‘reward’ every month, so long as you fund it with at least £750 a month and keep in credit. You’ll also need to set up two outgoing direct debits too.
This means you can earn £185 in the next 12 months for doing nothing – made up of £125 cashback plus £60 in rewards (£5 a month for 12 months).
Who’s it good for?
If you earn an annual salary of at least £9,150 and know you will stay in credit all year round, the Halifax Reward Current Account is definitely worth considering.
It’s also worth being proactive about its other perks – such as Cashback Extras which you can activate once you’ve registered with Halifax’s online banking. This pays back between 5% and 15% on the cost of purchases made with your debit card. Participating retailers include Morrison’s, Argos and Homebase but check the Halifax website as they can change.
While Halifax offers a fee-free £50 overdraft buffer on this account, it’s NOT the best deal for those who tend to live – or even to slip – into the red. That’s when it gets expensive.
After the £50 fee-free buffer you’ll be charged a flat rate of £1 a day up to £2,000, then £2 a day up to £2,999 and £3 a day on borrowing beyond £3,000. Unarranged overdrafts will cost a whacking £5 a day.
You also won’t qualify for this account if you have been paid cashback for switching any current account (even outside Halifax) since January 2012.
If you tend to keep a sizeable balance in your current account, Santander’s 123 may be a better bet as this will pay 3% AER on the whole balance. But bear in mind that 20% tax will be deducted from this amount before it hits your account.
By contrast, Halifax’s £5 reward is paid net of tax, which means this is the amount that actually lands in your account. Make sure you factor this in when you are comparing deals.
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.