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17 Jun 2021

First Direct increases its switching bonus to £125 - should you get a new current account?

Find out how First Direct's offer compares to other bank account bonuses

First Direct has upped its switching incentive from £100 to £125.

The online-only bank now matches HSBC's £125 switching offer, which comes with several caveats.

Here, Which? explains what you need to do to qualify for the First Direct bonus and how it compares with other available switching incentives.

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How to get the First Direct switching bonus

There are relatively few caveats for getting the First Direct switching bonus - the main restriction is that you can't have held a current account with First Direct or opened an account with HSBC since 1 January 2018.

If this restriction doesn't apply, then you simply need to open First Direct's 1st Account, using the Current Account Switching Service (CASS) to transfer over your everyday banking (such as direct debits) and pay in at least £1,000 to the new account in the first three months of opening it.

Once the criteria are met, the money will be transferred to your account within 28 days.

Note that First Direct currently has a message on its website to say it's taking 'longer than usual' to process 1st Account applications, so you may have to wait several days for your new account to be ready.

The offer is due to end at midnight on 12 July 2021, so you must have opened an account before then.

What does First Direct's 1st Account offer?

The 1st Account is a free current account, which offers a £250 interest-free overdraft (available subject to status) and access to First Direct's regular saver account, which currently pays 1% AER.

First Direct doesn't have any branches, so cash and cheques can either be paid in at the Post Office or in-branch at its sister bank HSBC.

Perhaps the most attractive feature about banking with First Direct is its reputation for excellent customer service. It's a Which? Recommended Provider this year, and scored top marks for customer service, communication and transparency of charges.

Alternative switching incentives

There are a range of current account switching bonuses at the moment, so it's worth considering what else is out there.

£125 with HSBC

Sister bank to First Direct, new customers can also get £125 by switching to HSBC's Advance or Premier bank accounts. However, these come with far more caveats than the First Direct offer.

Like the First Direct offer, you won't be eligible for HSBC's switching bonus if you've held an account with HSBC or opened an account with First Direct since 1 January 2018. This also puts a stop to anyone trying to bag both of the bonuses.

To open the HSBC Advance account you must pay in a minimum of £1,750 per month or £10,000 over six months.

While for the HSBC Premier account, which comes with travel insurance and a relationship management service, you must meet one of the following criteria:

  • Have an individual income of at least £75,000 and hold an HSBC mortgage, investment, life insurance or protection product
  • Have savings or investments of at least £50,000 held with HSBC within six months of opening your current account
  • Hold and qualify for HSBC Premier in another country (eligibility criteria varies).

These accounts will also give you access to HSBC's regular saver, which pays 1% AER.

The switching bonus will be paid within 20 days of the switch completing.

Free wine with Virgin Money

Offering a different option to cash, Virgin Money is offering new customers a free 12-bottle case of Virgin Wines (non-alcoholic wine is also available) when they switch to the Virgin Money current account. In addition, Virgin will also donate £50 to a charity of your choice hosted on the Virgin Giving website - and there are thousands to choose from.

To get the perk, you must apply for the account online and complete the switch with the CASS within 31 days. This must include at least two direct debits. You also have to download and register for the Virgin Money mobile banking app, and add £1,000 to the linked savings account (which pays 2.02% AER on balances up to £1,000).

Within 14 days of fulfilling these criteria, you should receive an email from Virgin Money with a Virgin Wines code and instructions on how to redeem it.

Alternatively, you can also apply for the current account via the Virgin Red app or website and you'll get 15,000 Virgin points for switching instead. You'll need to have already signed up to Virgin Red to do this. Points can be spent at selected high street retailers, as well as on Virgin Experience Days, Virgin Atlantic Holidays and Virgin Voyages. Points' value ranges between one point per £1 to 10 points per £1, depending on the retailer/what they're being spent on.

Other bank account perks to consider

While switching bonuses are popular as a quick and easy way to make money, there are other perks that could earn you even more.

For instance, a cashback account can give you money back on your spending every month. Santander's 123 account, for instance, pays up to £15 in cashback when you use it to pay household bills and certain Santander financial products. However, the account costs £4 a month.

Alternatively, a packaged account could potentially save you money on insurance premiums. Our research found that packaged accounts from Nationwide and The Co-operative Bank offer the best deal, as they include travel insurance, car breakdown cover and mobile phone cover. The Co-operative Bank's Everyday Extra account also has the option to opt-in for its cashback scheme.

Should you switch to a new current account?

Most people interact with their current accounts more often than, say, a savings account, so it's really important to make sure it's going to suit you.

Before you take the plunge, it's worth checking whether you'll be able to manage the account in the way you'd like - for instance, an online-only provider isn't the best choice for someone who likes to bank in-branch.

You might also want to find out the provider's reputation for customer service and whether it's signed up to the voluntary APP scam code to protect you from fraud.

Find out more:how to switch your bank account