How to get a Christmas present from the banksEarn £100 by switching to a new current account
04 December 2015
Pocket an early Christmas present from the banks, using our round-up of the best incentives for current account switchers.
It’s arguably the perfect time to upgrade. First Direct, Halifax and Marks & Spencer Bank will all pay you £100 if you switch to them, while other current accounts are paying market-leading rates on positive balances.
As part of the Current Account Switch Guarantee, your new provider will handle the switch, move everything across for you and close your old account within seven days.
Furthermore, the government's bank account comparison tool Midata has been introduced to encourage more of us to switch. You can use this tool to create a personalised comparison based on your own spending data.
To give you a head start, we’ve rounded up some of the best deals available at the moment.
Find out more: bank accounts - more than 70 current accounts compared
Switching incentives compared
The Halifax Reward account offers an initial £100 cash to switch accounts and pays an ongoing £5 for each month you pay in £750, provided you pay out two direct debits and stay in credit. This adds up to a maximum of £160 in the first year.
M&S Bank also pays a one-off bonus of £100, this time as a gift card to spend in-store. Extra benefits include reward points every time you use your debit card in M&S, a 0% overdraft of up to £100 and a linked regular saver paying 6% AER fixed for one year.
First Direct is a Which? Recommended Provider and offers £100 to switchers. The online and telephone bank has consistently topped our current account customer satisfaction table, although you must pay at least £1,000 into the account each month to avoid its £10 fee.
Best bank accounts for savers
If you generally stay in the black, consider a high-interest bank account for longer-term benefits.
TSB pays interest at 5% AER on balances up to £2,000, as long as you pay in at least £500 each month. What's more, you can earn 5% cashback every month on your first £100 of contactless spending and you'll have access to linked regular savings account paying 5% AER.
Nationwide also pays 5% AER on balances up to £2,500 but only for 12 months, falling to 1% AER thereafter. This account requires a higher minimum monthly deposit of £1,000, although Nationwide did score a healthy 68% in our customer satisfaction survey.
The Santander 123 account is the market leader for higher balances as it pays 3% AER on balances between £3,000 and £20,000, plus up to 3% cashback on utility bills, provided you pay in £500 each month and set up two direct debits. This account comes with a £2 monthly fee, rising to £5 per month from January 11 2016.
For those of you willing to put the effort in, we have a step-by-step guide showing you how to open multiple high interest bank accounts and move your money between them to boost your savings.
Tax on savings interest
All one-off current switching incentives are paid tax-free.
However, you'll pay tax on any interest earned from your current account (although non-taxpayers can claim this back from HMRC).
From April 2016, all savers are entitled to a personal savings allowance which means you will only pay tax if you earn more than £1,000 in interest.
Find out more: tax on any savings interest - find out how much tax you'll pay