Time to switch your current account? Banks up rewards to lure new customers

theguardian.com:

Fancy a free £175? If you are hunting for ways to make and save money, one of the quickest and easiest could be to reconsider your relationship with your bank.

First Direct is the latest to offer an unusually generous cash reward to new customers who open a 1st current account. This week it boosted its usual incentive of £150 by an additional £25, the highest amount any bank has paid since March 2020, according to the financial analyst Defaqto.

Since the beginning of August, Santander has offered £160 cashback to persuade people to switch, while new Halifax customers can get £150. For those joining Nationwide it is up to £125.

“It’s unusual to see banks launching switching incentives during the summer,” says Rachel Springall, a finance expert at data firm Moneyfacts. She believes they are looking for ways to drum up business at a time when households are particularly concerned about finances.

There are catches, of course. While there is nothing to stop you opening and using several current accounts at once – and it can make good budgeting sense to do so – you need to close an old account to get one of the best-paying new ones, as well as funnel in a decent amount of cash upfront.

To get the full £175 from First Direct, you have to deposit at least £1,000 within three months, and the offer applies only to those who have never had a First Direct account or had not opened an HSBC current account after 1 January 2019.

You also have to use the current account switch service, which will move money, standing orders and direct debits automatically, within seven days. If you have an existing overdraft, you may be able to move this, too.

Jenny Ross, Which? Money editor, says that more people should make the most of their current account.