Best current accounts for cash rewards
Many banks and building societies offer cashback on monthly bills and loyalty rewards as an incentive to open or retain an account.
We show the best offers in the table below.
If you’re looking for a bank account with extra benefits such as travel insurance or car breakdown cover, see our online tables to compare the best – and worst – packaged bank accounts.
To earn £7 a month, you need to pay out two direct debits, pay in £800 and cover the £4 Blue Rewards fee (was £3, increased on 1 July 2019). Additional cashback available if you own other Barclays products. Details below.
The Co-operative Bank
£2/mth if you pay in £800, pay out four direct debits, opt for paperless statements, log in to online/mobile banking, and stay within your overdraft limit. Plus, 5p per debit card transaction up to a max £3/mth. Previously, Everyday Rewards paid £4/mth plus 5p per debit card transaction up to a max £1.50/mth
|Danske Bank |
£7/mth, if you pay in £1,200 and pay out three direct debits (can be opened online but branches available in Northern Ireland only).
On 1 July 2020, Halifax launched 'Reward Extras' which lets you choose to be rewarded with £5/mth cashback for either spending (£500+ on your debit card) OR saving (if you keep your balance at £5,000+). Alternatively, you can opt for one of these monthly reward benefits: one free Vue cinema ticket; two film rentals via Japanese streaming service Rakuten TV; three digital magazines. Whichever reward you choose, you will need to pay at least £1,500/mth into your account, up from £750 previously.
|Reward||70%||£5 or monthly reward benefit e.g. free Vue ticket||£3 or £0 if you pay in £1,500/mth|
As of 1 Feb 2020, you can earn £4 for paying out two or more direct debits plus £1 for logging into the mobile banking app each month. Also pays 1% cashback on spending at certain retailers. You can only apply for a Reward account if you can pay in £1,250 each calendar month to any eligible NatWest account (excludes Foundation, Basic or Mortgage).
|Royal Bank of Scotland |
As of 1 Feb 2020, you can earn £4 for paying out two or more direct debits plus £1 for logging into the mobile banking app each month. Also pays 1% cashback on spending at certain retailers. You can only apply for a Reward account if you can pay in £1,250 each calendar month to any eligible RBS account (excludes Foundation, Basic or Mortgage).
1-3% tiered cashback paid on household bills paid by direct debit as long as you pay in £500, pay out two direct debits and log in to online or mobile banking at least once every three months. The 123 Lite account will cost £2/mth from 27 Oct 2020 (currently £1). The full Santander 123 account pays interest at 0.6% on up to £20,000, for a higher monthly account fee of £5. Both the full account and Lite version wcap cashback at £5 per cashback tier (so max £15 per month overall).
|63%||1% - 3% on bills|| |
£2 (123 Lite)
Earn £5 cashback for the first six months only (including the month you open your account) when you make 30 debit card payments or more each calendar month.
|Spend & Save||63%||£5||n/a|
Data correct as of January 2021.
Which? Customer Score: Our rating for customer satisfaction, based on feedback from real customers. The score is made up of a customer's overall satisfaction with the brand, and how likely they are to recommend that brand to a friend. We surveyed 4,501 members of the general public in September 2020. Our full table includes scores and star ratings for all banks.
Barclays Blue Rewards in detail
Barclays Blue Rewards scheme can be added to all accounts except Basic, Young Person's, BarclayPlus, foreign currency accounts, Wealth and Business.
The headline offer is cash for setting up monthly direct debits - you can earn £7 per month for two direct debits (£3.50 each).
But, the more products you hold with Barclays, the more cashback you will earn:
- £5 per month for a Barclays mortgage,
- £5 per month for life insurance with critical illness cover (£1.50 for standard life insurance),
- £1 per month for a personal loan,
- 3% when you take out or renew home insurance.
You can also earn an additional 1% cashback at more than 150 retailers when shopping through online banking or using the Barclays mobile banking app.
Once you’ve signed up, you’ll only earn Blue Rewards if you pay in at least £800 and pay the monthly £4 fee (taken from your nominated account on the second working day of each month).
Santander 123 in detail
Both the Santander 123 account and the 123 Lite account pay up to 3% cashback on selected household bills:
- 1% cashback on mobile and home phone bills, broadband and paid-for TV packages and the first £1,000 you pay towards a Santander residential mortgage.
- 2% cashback on gas and electricity bills, Santander home insurance and Santander life protection.
- 3% cashback on water bills.
The full account also pays 0.6% interest on credit balances (compare high interest current accounts here).
Spending on your Santander Visa debit card can also bag you additional cashback of up to 15% at a range of major retailers.
Santander 123 Lite
If you don't want to use the account for savings, the Lite account pays cashback on bills (but no credit interest) for only £2 per month.
To be eligible, you'll need to pay in at least £500 into your account every month, have two active direct debits set-up, and log in to online or mobile banking at least once every three months.
NatWest and RBS Reward in detail
You can earn £4 for paying out two or more direct debits, plus £1 for logging into the mobile banking app each month.
Both banks offer 1% cashback on spending at certain retailers as well.
You must pay £1,250 into the NatWest or RBS Reward current account each month to qualify for the perks.
Your 'Rewards' become available to spend once you’ve earned the equivalent of £5 or more. At this point you can choose to either: bank it so that the money is transferred to your current account; trade up for vouchers or tickets which you can use at selected retailers; or donate it to a participating charity.
Maximising current account rewards
Many providers ask you pay in a minimum amount each month or maintain a certain number of direct debits to be eligible for current account rewards.
In some cases, you may need to hold other products with that provider, such as a mortgage, personal loan, or insurance, to benefit fully.
Compare rates to the rest of the market as you may be better off holding these products with other providers, even with the extra cashback.
Watch out for fees being increased, or benefits being chopped and changed. If they are, take the time to reassess whether the account is still working for you and consider switching if the benefits no longer stack up.
Are current account rewards taxable?
Some rewards are considered taxable by HM Revenue & Customs (HMRC) and some aren’t. It all comes down to how the taxman categorises rewards for tax purposes. Broadly, there are three possibilities:
- Annual payments: taxable and paid with basic-rate tax deducted at source
- Miscellaneous income: taxable but paid without tax deducted
- Neither annual payments nor miscellaneous income: not taxable and paid without tax deducted
HMRC explained to Which? that it would only expect current-account rewards to be annual payments if they continue for more than a year and the customer does not pay a fee for holding the account.
Cashback on household bills, offered by the likes of Santander and NatWest, are essentially a discount on goods or services, not income – so there is no tax to pay.
For annual payments, you don’t owe any extra tax if you are a basic-rate taxpayer. If you pay tax at higher or additional rates you should pay the additional amount over and above the tax deducted at source if you receive rewards with basic-rate tax deducted.
If you are a non-taxpayer, you can reclaim any tax deducted by using the R40 form or on your self-assessment tax return if you complete returns.
Halifax and Co-operative Bank
Both Halifax and The Co-operative Bank offer rewards that fall into the ‘annual payments’ category, which means they deduct basic-rate tax of 20% before paying rewards.
The gross monthly reward for the Halifax Reward account is £6.25, but you receive a net reward of £5. The gross monthly reward for the Co-op Everyday Rewards account is £5, but you receive a net reward of £4.
Should I open a joint account for cashback?
Unlike interest-paying accounts, there’s little to be gained by opening multiple cashback current accounts, as banks tend to restrict benefits.
For example, the Barclays Blue Rewards scheme pays £7 cashback a month for maintaining two direct debits, plus varying levels of cashback for holding extra Barclays products, but customers can only hold one Rewards Wallet each.
Similarly, you can only nominate one account to receive Co-op Everyday Rewards (up to £5.50 cashback every month).
And, while NatWest Reward joint account holders can earn cashback for spending at participating retailers using their individual debit cards, only one person can earn the £5 for paying direct debits and logging into online banking.