Banks have begun a battle for the best switching incentives as they prepare for the launch of a scheme that will make it easier for customers to move bank accounts.
RBS and NatWest have launched a cashback scheme on a range of debit cards for both existing and new customers, while First Direct has upped the amount it is offering to those who choose to switch.
Use our step-by-step guide to find out how to switch bank account in five simple steps.
Bank account switching incentives in detail
First Direct has this week increased its joining incentive from £100 to £125.
To qualify for the payment you’ll need to be a new First Direct customer, have a salary/income of at least £1,000 per month and transfer at least two direct debits and/or standing orders to your account.
Meanwhile, RBS/NatWest have launched a new loyalty scheme, called Cashback Plus, offering debit card holders 1% cashback at a limited range of retailers.
Although the free scheme will offer a boost to current RBS/ NatWest debit card holders, customers thinking of switching for the cashback alone might be better of with a Best Rate cashback credit card which has no restrictions on where you can earn cashback.
How does Cashback Plus work?
The new scheme is free and available to all customers except the banks’ Basic, Step and Cash account holders.
Customers need to sign up to the scheme by registering online at either provider’s website.
At the moment customers can earn 1% cashback at Tesco until 30th November. They can also earn cashback at 11 other retailers including BP, Cineworld, Caffe Nero, Lock Fyne restaurants, Hungry Horse, Ernest Jones, H Samuel, Charles Tyrwhitt, Feather & Black Multiyork, and American Golf.
Once you’ve earned £5 worth of cashback you can either convert it into money and transfer into your Natwest or RBS current account, exchange the rewards for gift cards or tickets from selected retailers or donate the the rewards into one of the scheme’s chosen charities.
Before using the scheme, customers should check the exclusions available on each provider’s website as you could lose out on some hard-earned cashback. For example, transactions made through third party websites such as PayPal and Amazon Payments are not eligible for rewards.
Can I earn higher rates of cashback elsewhere?
Cashback credit cards
Customers can currently earn higher levels of cashback with some of the best cashback credit card deals on the market. Best of all, you can earn cashback on nearly all credit spending and not restricted to any particular retailers.
For example, the American Express Platinum Cashback credit card currently offers up to 5% cashback for the first three months (capped at £100) and 1.25% cashback on all other spend.
Cashback credit cards are best suited to customers who can pay off their bill in full each month to avoid paying interest on their monthly spend.
Santander’s 123 current account also offers between 1% and 3% cashback on household bills paid by direct debit as well as up to 3% interest on accounts in credit exceeding £3,000 and up to £20,000. The account comes with a £2 monthly fee.
Finding the best current account
In September 2013, the Payments Council is due to launch a new account switching service designed to help customers switch bank account.
If you are looking to switch current account, there are some good deals on the market. We show the best deals for a variety of scenarios:
- Best bank accounts for credit interest – we show the best deals for current accounts that pay interest for customers that stay in credit.
- Best bank accounts for authorised overdrafts – we show the best deal for customers that go in to the red each month.
- Fee-charging bank accounts – we rate packaged current accounts on the market, showing the key benefits that they include and how much they cost over a year.