Banks throwing free cash at customers to switch

Cash Bonus Bank Terms Conditions

Desperate banks are increasingly luring customers with higher cash bonuses.

Over the last six months, 22 current accounts have rewarded people with lump sums when they switch, up from three in the same period last year, according to analysis firm Defaqto.

Switching incentives have also shot up to the highest since March 2020, to £175, which is First Direct's latest offering.

Katie Brain, of Defaqto, said: “At a time when the cost of living is starting to affect a lot of people, it can be worth reviewing your current account and switching to benefit from the cash incentive offered.”

But there are terms and conditions which may make the accounts that come with free cash inappropriate.

“You need to make sure that the account you are switching to is suitable for your needs – some require a minimum monthly deposit and/or monthly fee,” she added.

For example, customers switching to First Direct will need to deposit at least £1,000, while those signing up for Santander’s £160 incentive must also pay a monthly £2 fee.

Customers should also remember that some providers pay out the cash quicker than others. For example, Santander does not make the payment until 90 days after the switch.

Different current accounts will suit some people's spending habits better than others, said Rachel Springall of data firm Moneyfacts.

“Consumers who are searching for a rewarding bank account may wish to choose one that offers cashback on spending or even on their monthly bills.

“Those consumers who may dip into their overdraft would be better off choosing an account with a competitive overdraft tariff or even an account with an interest-free buffer.”