Get Free Cash From Your Current Account!

Despite the fact we use them on a day to day basis, current accounts are the often forgotten product of the banking world.

And, while we continue to scour the best buy tables for the best rates for our savings, many remain content with the paltry 0.1% interest rate paid by the big four's standard current accounts.

However, several banks have wised-up to this gap in the market, and have launched accounts paying market leading rates to entice you to switch banking allegiances.

For example, Alliance and Leicester is currently offering 8.5% AER on its Premier Direct current account and Abbey 8% on its equivalent current account in order to get their hands on your hard earned cash.

However, one thing worth pointing out is that both these deals only last 12 months, after which they are slashed to Bank of England base rate less 1% (up to £2,500) and 2.5% (providing you pay in at least £1,000 a month) respectively.

So, with an expiry date attached to these deals, perhaps it's time to consider other alternatives instead - such as a cash sweetener.

The £100 giveaway

Abbey has become the latest bank to recognise that cash is king, and, if you switch your bank account to them before 15th December, they will give you £100.

It's not the first time a bank has offered potential customers a golden handshake to join. For example, First Direct will also give you £100 if you switch to its 1^st Account.

Financially backed by HSBC, First Direct is renowned for its excellent customer service, and may be a better alternative for those who consider good customer service key.

So, here's how the two current accounts stack up:

As you can see, there are a few differences between the two accounts. Firstly, both have different funding requirements, and while Abbey stipulates you need to pay in at least three monthly credits of £1,000 within the first six months in order to qualify for the £100 payment, First Direct requires larger monthly credits of £1,500.

In addition, First Direct usually charges £10 a month for the privilege of banking with them. However, you can avoid this charge if you pay in the expected £1,500 a month.

To put in £1,500 a month, you need to earn at least £25,000 a year if you make student loan repayments through your employer, or £23,500 if you don't. However, First Direct says you can top up monthly credits with additional funds, which don't necessarily have to come from a regular salary.

Alternatively, you can avoid the monthly charge by maintaining a balance of £1,500 or by taking out an additional First Direct product, such as a savings account or mortgage.

Interested in interest rates?

There is also the matter of interest rates. Both accounts pay pretty dismal in-credit rates, with First Direct not paying any interest at all on credit balances!

The good thing about the Abbey account is after you've qualified for the £100 bonus, there is no minimum funding requirement (although to take advantage of the preferential overdraft rate of 12.9% EAR, you have to maintain the £1,000 monthly funding, or be charged 19.9% EAR).

You may also think First Direct's zero interest policy makes it a no-go. However, what it lacks in interest rates, many Fools say it more than makes up for through its excellent customer service.

In fact, First Direct is so confident of its service levels that if after six months you're not satisfied, it will give you another £100 to leave them!

The bank also offers a £250 interest free overdraft and free sweep service, which automatically transfers extra funds into a connected savings account if required. This way, you can always make sure your savings are earning interest.

If, however, you fail to fall into either of these earning brackets, but still want a decent current account, Alliance and Leicester's Premier Direct current account pays 8.5% AER for 12 months on balances up to £2,500, and only requires a £500 a month credit.

Switching your current account may seem like more hassle than it's worth, and, after four years working at a high street bank, I think I've witnessed most of the horror stories associated with switching, plus worse.

However, many banks now have dedicated switching teams to make the process as smooth as possible, and if you're willing to take the current account plunge, it could pay handsome dividends in the end.

More: Five Fabulous Current Accounts | The Nicest Current Account In Town | The True Value Of Current Accounts With Benefits

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