The best offers for those wanting to switch their current accounts
There are several new tempting current accounts on the market, many offering a cash incentive if you switch. Ruth Jackson Kirby looks at the best around right now.
Banks are often prepared to make a juicy switching offer in order to entice new customers to their current accounts. It is a successful tactic. According to data from the Current Account Switch Service (CASS), Halifax notched up 22,000 new current accounts between July and September last year – the largest gain of any provider in that period. No wonder: it was offering a £100 switching incentive at the time.
At present First Direct is offering £100 to new current account customers, while HSBC has a £125 switching bonus. Meanwhile, Virgin Money will give new customers 15,000 Virgin Red points. “This would buy you a ‘truffle-experience’ at home, a language course and a bottle of bourbon, or six bottles of Prosecco from Virgin Wines, and five sausage rolls and three hot drinks from Greggs,” says Katherine Denham in The Sunday Times.
The idea of £125 for little more than moving your current account – a process that should be straightforward and take seven days with CASS – could be very tempting. But it is important to make sure that the account will actually meet your needs too. To qualify for the £100 First Direct deal, you must use the free current-account switching service and pay in £1,000 within the first three months. The bank regularly wins awards for its customer service and tops tables for overdrafts thanks to its £250 interest-free facility, but you won’t get any interest on your balance. Instead, you can apply for a linked regular savings account paying 1% interest. You will only get the switching bonus if you have never held a First Direct account before or opened an HSBC or M&S Bank current account since 1 January 2018.
Make minimum payments
HSBC’s switching bonus is slightly better for its HSBC Advance account – at £125 – but you have to be able to pay in at least £1,750 a month or £10,500 every six months and move at least two direct debits or standing orders in order to qualify. The account doesn’t pay any interest and the 0% overdraft is for just £25. You can open a linked regular-savings account paying 1%. For the sake of £25 the First Direct offer with better customer service and a larger interest-free overdraft looks preferable.
Virgin Money’s offer of 15,000 Virgin Red points may not be as simple as getting £100 in your pocket, but look more closely and it is an appealing option for anyone looking to earn interest on their balance. “One of the best deals on the market for consumers looking for a high interest rate is from Virgin Money,” says Rachel Springall, finance expert at moneyfacts.co.uk. On its current account savers will earn an annual equivalent rate (AER) of 2.02% on balances up to £1,000. Meanwhile, the overdraft charges an equivalent annual rate (EAR) of 19.9%, “around 20% less than some other alternatives on the market”.
If you switch to Virgin Money via CASS, you’ll get a free case of wine and £50 to donate to any Virgin Money Giving charity. Alternatively, you can apply via Virgin Red to get 15,000 points. These can be used to get £82.50 off a Virgin Atlantic Holiday or to buy a Virgin Experience Day. To get the current account you need to complete the switch, download and register for the mobile-banking app and add £1,000 to the linked savings account, which pays 0.5% AER. (You can move the money once Virgin Red has sent you a code.) You will also need to transfer two direct debits. Note that all this only applies if you haven’t held a Virgin Money account before.