Halifax will slash the monthly cash bonus on its current accounts from October, as new figures show the bank gained the most customers in the first part of 2018.
New and existing Halifax Reward and Ultimate Reward current account customers will see their monthly £3 bonus cut down to just £2 a month.
It’s the second cut to the bonus since February 2017, when it was reduced from £5 a month.
Earlier in July, Halifax upped the account fee on the Ultimate Reward account from £15 to £17.
Which? explains how the change will impact you and whether it’s worth switching when it comes into force later this year.
How much will the Halifax cut cost you?
Currently, the Halifax Reward and Ultimate Reward accounts pay a bonus of £3 for each month that you pay in at least £750, remain in credit and pay out at least two direct debits.
From 1 October 2018, the reward on both accounts will fall to £2 a month, as long as you meet the same conditions.
At most, account holders will only be able to rack up £24 a year instead of £36 annually – a third less.
The Reward product is a fee-free account, so the perk is pure profit for customers.
However, the Ultimate Reward account is a packaged account, which offers worldwide family travel insurance, mobile phone insurance and UK breakdown cover for £17 a month – meaning the monthly bonus works to offset this fee.
Effectively, while the bonus currently brings down the cost of this account to £14 a month, the change will mean customers spend £15 a month (given they meet the conditions).
Halifax isn’t making any changes to its switching bonus. New customers will still be able to get £75 for signing up and switching using the Current Account Switch Service.
- Find out more: how to switch your bank account
Why is the bonus being cut?
A spokesperson for Halifax said: ‘This change ensures we can continue to offer all the benefits of these accounts while remaining competitive in the market.
‘The Ultimate Reward Current Account offers an extensive range of features and benefits including several insurance products. To purchase these individually would cost more than the monthly account fee. The Reward current account remains fee-free.’
Is it worth switching?
The latest current account switching figures show that people have flocked to Halifax in the first part of 2018, so many will be no doubt be disappointed to see the cash bonus reduced.
However, Halifax is not alone in scaling back perks, with most current account providers announcing changes over the last couple of years.
Lloyds and Bank of Scotland, for example, cut current account interest rates earlier this month.
That said, it’s still worth seeing if you could be better off with another deal.
- Find out more: best and worst banks
The best accounts to switch to
If you’re after an account that pays high interest, the Nationwide FlexDirect offers a market-leading 5% AER interest on balances up to £2,500 for 12 months. But there’s a catch: you must deposit at least £1,000 a month.
For larger balances, there’s the Santander 123 Current Account, which offers 1.5% AER interest on pots worth up to £20,000 and pays up to 3% cashback on household bills. Just watch out for the £5 monthly fee.
If you like the thought of earning cashback on your household bills, the NatWest Reward account offers 2% cashback on seven household bills, and comes with a lower £2 monthly fee or the Santander 123 Lite offers up to 3% cashback with a £1 monthly fee.
For those after a packaged account, the Nationwide FlexPlus offers worldwide family travel insurance, smartphone insurance and UK and European breakdown cover, plus 3% AER variable interest on up to £2,500 – all for £13 a month.
Alternatively, if you’re after a switching incentive M&S Bank is offering £185 in vouchers if you switch and stay or First Direct is offering a choice of £150 in Expedia vouchers, gadgets like Bose headphones or the chance to do an online course.