Four banks that are trying to suck up to you

Increasing numbers of lenders are offering cash as an incentive for switching your current account. Here, we highlight some of the best ones around...

The other day I was flicking through a newspaper when a leaflet dropped out advertising The Co-operative’s new satisfaction guaranteed service.

Under this scheme, The Co-operative will give you £50 if you switch to one of its current accounts and then decide you’re not happy with the service it provides.

As I looked at the leaflet it struck me that offering cash as an incentive for switching accounts is a strategy that’s becoming increasingly popular with banks. And it's one that I quite like. After all, I certainly prefer the idea of being rewarded for switching my current account, rather than paying my bank for so-called perks which are attached to various packaged current accounts.

Customer satisfaction

Fortunately, these days, switching current accounts doesn’t have to be a huge hassle. Many lenders offer switching services in which they will transfer all of your direct debits and standing orders across when you apply for the account – so you don’t have to worry about a thing.

And banks are becoming increasingly confident that you’ll be completely satisfied with their switching service. So much so that they are offering you cash if you’re not. And if lenders are offering you cash, they really must be confident that you’ll be happy.

So, as I have just mentioned, if you apply for a current account with The Co-op, such as The Co-operative Bank Current Account Plus, and you’re not happy with the switching process, you’ll be given £50. Be warned however, this offer is only available to customers who have applied for a current account by 30 June and have started the switching process by 31 August. So hurry up if you want to do this!

But is this just a gimmick to get you to take out a rubbish account? Luckily, it's not - the The Co-operative Bank Current Account Plus is a decent account. It comes with a fee-free overdraft of £200, you get access to exclusive mortgage deals and 20% off The Co-operative home insurance for the first year (remember, you should still shop around to ensure this is a good deal). Just bear in mind you will need to pay £800 into your account this current account month.

And finally, The Co-op is of course, an ethical bank, campaigning for a range of issues from landmines to safer chemicals, climate change to trade justice. So if that sort of thing floats your boat, The Co-op might be the place to go.

Fancy £100?

The Co-op is not the only bank to offer money if you’re not happy with the service. First Direct is also so confident that you’ll be satisfied with its switching service on its 1st Account, that if you’re not happy within 12 months and you want to move again, it will give you £100 to say sorry and help you to switch your account! (You will need to have paid in at least £1,500 a month for six months to qualify).

Not only that but you will also be given £100 for simply switching your account to the First Direct 1st Account in the first place! Can’t be bad. (You will need to pay in at least £1,500 per month within three months before the £100 will be added to your account.)

And the bonuses don’t end there because this account will also give you an interest-free overdraft of £250. 

Similarly, Alliance and Leicester also offers £100 cashback when you open and switch to the Alliance & Leicester Premier Current Account. This is also a great current account to have if you have a tendency to regularly slip into the red on a regular basis as it offers an interest-free overdraft (up to £2,000) for 12 months. After that, a 50p a day usage fee will apply.

With the Alliance & Leicester Premier Current Account you will also be given free annual multi-trip European travel insurance worth up to £60. Of course, you should still read the terms and conditions of this policy carefully to ensure you know exactly what it covers you for – if you are planning to go skiing, for example, you will need to upgrade the policy to make sure you’re covered for winter sports.

Just bear in mind you'll need to switch all your direct debits over to this account to be eligibile for the £100 offer, and you'll need to pay in at least £500 a month every month.

Greater rewards

Of course, receiving a one-off cash handout is great. But if you’d prefer to be rewarded on a regular basis instead, the Halifax Reward Current Account might be more up your street.

That’s because every month you pay £1,000 into the account, you’ll be rewarded with £5 – whether you’re in credit or overdrawn. (Note this account is not the same as the Halifax Ultimate Reward Account that requires you to pay a monthly fee.) 

What’s more if you do apply for the Halifax Reward Current Account, you’ll also be able to get a 0.2% bonus rate on the Halifax Web Saver Extra account which offers a very competitive interest rate of 2.80% (including the bonus). The only easy access savings account that beats this is the Alliance & Leicester Online Saver Issue 7 Account, paying a slightly higher interest rate of 2.81%.

Earn your interest

If you’re not particularly interested in receiving cash rewards on your current account, perhaps you’d prefer to earn a decent interest rate instead. And at the moment, several current accounts are offering better interest rates than a lot of savings accounts – so you’d be mad to miss out! To give you an idea, here are three examples:

So as you can see, some current accounts really do pay a decent interest rate. So much so that if you wanted to, you could even use one of these accounts as a savings account. After all, you’re getting a fixed rate of interest as well as easy access to your money. Bonus!

Just bear in mind that you will need to pay £500 a month into the Alliance & Leicester Premier Direct Current Account and £1,000 a month into the Santander and Lloyds TSB accounts.

And if you need an overdraft, it's worth noting that the Alliance & Leicester account also offers an interest-free overdraft (up to £2,000) for the first year. After that, a 50p a day usage fee will be charged (up to £5 a month).

So now that you know current accounts really can give you more, it really is worth thinking about switching. Of course, you should ensure you do your research fully before switching and make sure the account is right for you and your needs - don't get too sucked in by cash rewards. But hopefully the incentive of a cash reward will encourage you to take a closer look at your current account and see whether there's a better one out there for you!

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