The new Halifax/Bank of Scotland (HBOS) Reward Current account could be a good choice if you stay in credit. But it’s one to avoid if you tend to go overdrawn.
Rather than paying you interest when you are in credit, the new account will pay you £5 a month, as long as you pay in at least £1,000 each month. You will get this £5 regardless of how low your balance goes, and even if you dip into the red.
You are guaranteed to get £60 a year as long as you meet the minimum monthly funding requirement, and makes the account a good bet if you keep your account in credit or even if you run a small overdraft for a limited amount of time. In the scenarios we use to calculate our Best Buys, if you went into authorised overdraft by £100 for one week each quarter, it wouldn’t cost you a penny thanks to the £5 monthly payment.
The account is much less attractive if you like to run a larger overdraft, or run an overdraft most of the time. The account does not charge overdraft interest or fees in the traditional sense, but instead you will incur a daily fee for each day you are overdrawn.
The fee ranges from £1 a day for authorised overdrafts under £2,500 to £5 a day for every day you are in an unauthorised overdraft. While this has the benefit of being quite a clear and simple charging structure, it’s not cheap.
If you had a £500 authorised overdraft for two weeks a month, it would cost you £108 (after taking into account the £5 a month payment), compared to the cheapest of our Best Buys, which would cost you nothing. If you want to switch to a better current account, check out our Best Buys or use our comparison tool to find the best account for you.
Time for a change
The Reward Current Account replaces HBOS’s previous accounts, which are no longer available. HBOS intends to move all its current account customers onto the new charging structure over the next year, but in the meantime existing customers should continue to use their accounts as normal.
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