MoneySavingExpert.com Bank Accounts
Feature by Martin Lewis, MoneySavingExpert
Fancy some free cash? Well, those generous bowler hatted ladies and gents at your bank are giving it away. Quite literally, they will to pay you up to £150 to switch bank account - and, as it can also improve the service and features, grab it.
The bank account switching market is red hot, with many banks willing to pay for your custom. Here are the 10 need-to-knows.
Q. You’re talking about switching, but I’ve heard all types of horror stories?
Martin’s Answer: Much of that is a legacy opinion from a few years ago. We’ve just celebrated the second
birthday of what’s called switching’, and that’s made the process easier.
‘seven-day I did
a poll of 100s of people on my Facebook page who’d tried it and 82% said they found it ‘easy and hassle- free’, while only 4% experienced problems.
In practice, when you apply for a new bank account, assuming you’re accepted, three things happen within seven working days:
1. All standing orders and direct debits are moved for you.
2. Your old account is closed. 3. All payments to your old account are auto- forwarded for three years.
Yet still far too few people try it – last year only 2% changed bank accounts – strange as my mailbag is full of people complaining about their banks. So my message is stop bitching and start switching.
Q. OK, so it’s easy, but what’s this about free money?
Martin’s Answer: Many of the challenger banks (those who want to break the dominance of the old ones) want you to switch to them so much they’re willing to pay you to do it.
There’s a full rundown and eligibility criteria at mse. me/bankaccounts. But, in brief, here are the current top picks:
•
FirstDirect.co.uk gives switchers a free £100 (or more via some websites) – cash comes within 28 days of switching and paying in £1,000.
• Other benefits: It’s won every customer service poll I’ve ever run, 92% rate it great, it has a
52
linked 6% regular saver, 0% overdraft up to £250.
•
Halifax.co.uk/Reward gives a free £100 within three working days of switching.
• Other benefits: Pays £5 each month as long as you’re in credit.
•
The
marksandspencer.com current account gives a free £100 M&S gift card (or more via some websites), within a month of switching.
• Other benefits: Unlike other accounts, you don’t have to pay in a set monthly amount (see next question) linked 6% regular saver, 0% overdraft up to £100.
Q. Can anyone get these?
Martin’s Answer: You’ll be credit scored to get these. Though most people who have an existing bank account should be fine (unless it’s a basic account).
Yet to get the bonuses, you normally need to use their switching service and have a couple of direct debits or standing orders set up. Plus with First Direct, you must meet a minimum pay-in requirement, equivalent of £13,200 a year – effectively a way of requiring you to earn a set amount.
If you have irregular income, M&S is the only one not to demand this.
Q. Aren’t there also accounts that pay high interest on your savings?
Martin’s Answer: Yes that’s another form of competition, and if you have higher savings, that is likely to be more lucrative in the long run than grabbing the switchers bonuses.
The big one is the
Santander.co.uk 123 account – it pays up to 3% cashback on certain household bills and up to 3% AER interest if you have between £3,000 - £20,000 in it. Its £24 a year fee is rising to £60 in January, yet if you’ve got over £5,000 savings and earn some cashback, it’s still likely you’re winner (full analysis of if it’s worth it in my
www.mse.me/ santanderfee blog)
If you’ve less, the
lloydsbank.com Club Lloyds pays 4% AER interest if you’ve £4,000 to £5,000 in it and both
TSB.co.uk and
Nationwide.co.uk pay 5%, but only on up to £2,000 with TSB and £2,500 with Nationwide for the first year.
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