Would you move your current account for free money? The cash bonuses on offer from banks when you switch accounts are certainly proving lucrative as new data reveals a record 433,701 switches took place in the last quarter of 2023.
The last time the service recorded a high was in November, when it saw 162,637 switches.
The total number of bank account switches now surpasses 10 million since the Current Account Switch Service (CASS) was launched in September 2013.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
According to CASS, the record level seen between 1 October 2023 to 31 December 2023 was primarily due to the free money offered by banks to customers when they switched current accounts.
Some of the most popular deals we saw last year include Nationwide’s £200 switching offer which was pulled just before Christmas, and Barclays £175 switch bonus which was withdrawn within a month.
As well as the free cash, there may be a number of reasons why you may want to move current accounts, such as wanting to be near a branch service, overdraft facilities, or better-linked savings rates.
John Dentry, operator of the CASS said: "Despite higher interest rates, cash incentives and other financial benefits, online and mobile banking still continues to be the most significant reason that consumers prefer their new current account."
We look at which banks were the most popular, current switching deals, and how to switch accounts.
Which banks were the most popular in 2023
These were the most popular banks that people switched to in 2023, according to the CASS.
- NatWest received 59,158 switches
- 25,037 people switched to HSBC UK
- TSB attracted 15,754 new customers
- RBS received 6,382 switches
But all of these switching incentives from high-street lenders are no longer on the market.
What are the current switch deals?
Despite TSB and the Co-operative Bank launching its new switching deals this month, the Co-operative has already withdrawn its deal- leaving only two switching incentives on the market.
TSB and First Direct’s switching bonuses remain, but you will need to act fast to bag the free cash as First Direct has been on the market for over a year and most deals have had a short lifespan, so these offers could disappear soon.
TSB | Get £125 - plus up to £60 cashback
TSB is offering £125 free cash when new customers switch to their free Spend & Save account.
To be eligible, you must complete the full switch using the CASS before the offer is withdrawn, and do the following by 15 March 2024:
- Make at least one payment on your TSB account using the debit card
- Log in to the TSB mobile banking app at least once
- Have at least two active direct debits on your new TSB account
Once you meet the full criteria, the £125 will be paid into your account between 20 March 2024 and 29 March 2024.
Get the full details on how to bag a further £60 cashback with TSB on our best bank switching guide.
First Direct | £175 switch bonus (plus 7% AER interest on savings)
When you switch your current account to First Direct, you get a £175 bonus. To be eligible for the free cash, you need to do the following:
- Switch your current account to a First Direct 1st Account using the Current Account Switch Service (CASS).
- Pay in at least £1,000 within three months of opening the account.
- You must be a new First Direct customer who hasn’t held a First Direct product before, and you do not qualify for this offer if you opened a current account with HSBC on or after 1 January 2020.
Once your First Direct account is open, you will need to log in to the banking app, select the account you want to switch to and tap ‘switch to us’.
You will be paid the £175 bonus within 28 days of the above criteria being met. Read more on our best regular savings accounts guide to see how you can open the linked 7% AER First Direct regular saver.
How to switch current accounts
Using the CASS is the easiest way to switch current accounts, and in most cases this is what banks will use to facilitate the move.
The service makes it a seamless process and the switch is completed within seven working days.
To start, you need to open a new current account and request a switch via the CASS. They will then close your old current account, move all of your funds, direct debits, and standing orders to your new account within seven days.
Plus, for three years you don’t have to worry about any money trying to go into your old current account, as the CASS will redirect this automatically to your new account.
Under their switch guarantee, the CASS is free to use, you can choose your switch date, and you will be refunded for any interest lost on either your new or old current account in the instance that something goes wrong during the switch process.
What to look out for when switching current accounts
If you are taking advantage of a switching incentive, there are a lot of eligibility requirements and small print involved. Here’s what to look out for.
Do you need to be a new customer? Most offers will state that you need to be a new customer of the bank to take advantage of the switching deal. But, don’t let that put you off. Read the small print, as it might give more detail on which existing customers can open the account. For example, with the first Direct deal, if you became an HSBC customer before 1 January 2020, you are eligible for the offer. If you became an HSBC customer on or after 1 January 2020, you are not eligible.
You might not get the headline bonus. Like the TSB offer, the headline amount you can earn is up to £185, but there are two parts. Completing the full switch only gives you £125. The remainder is achieved through its monthly cashback offer, which has a separate eligibility criteria.
See what benefits come with the current account. Although it makes sense to go for the bank offering the biggest cash bonus, it’s not always the best idea. It’s always worth going through the current account benefits, as they might be more appealing in the long run at the cost of £10 to £20 less than the top cash bonus. First Direct offers £10 less than TSB’s £185 offer, but it comes with a handsome 7% AER regular saver which you can take advantage of once you become a First Direct customer.
-
Pension warning: one in five don’t know how much is going into their pensionHow to check your pension contributions and why it matters
-
50,000 power of attorney applications rejected – how to avoid common mistakesA freedom of information request shows that thousands of lasting power of attorney (LPA) applications are rejected due to errors. We explain how to avoid mistakes and reveal tips to make the process as straightforward as possible
