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Various factors have been dampening activity in the banking sector, and this has started to affect the perks that customers have been able to get on current accounts. We've taken a look at some of the rewards still available on current accounts, to see if switching to these could still be worth the hassle.
There are a few reasons why current account providers have been shrinking the rewards they offer. For one, there's the low interest rates, which means banks don't have to try so hard to make their accounts attractive. Another reason is that banks have been told by the Bank of England to retain more capital, and a simple way for them to save money is to decrease or even remove the rewards they offer.
"NatWest cut the cashback on its Reward account last month from 3% to 2%, while Halifax cut the £5 monthly credit to £3 on its Reward Account in February and Nationwide is expected to raise the monthly fee on its FlexPlus by £3," explained Rachel Springall, finance expert at moneyfacts.co.uk. "These changes might not have a huge impact from day one, but consumers will no doubt feel the pinch over the longer term."
So, which accounts are still worth looking at? We've compiled a table of the best deals around right now (below) to help you figure out how much money you could still be earning by switching over.
|Current account||Cashback, switch and spend||Based on a £500 eligible spend / loyalty||Total money earned minus any fees in first month|
|Barclays - Bank Account with Blue Rewards||Up to 7% cashback (selected partners), £7 pm credit. Extra £5 for mortgage holders, £1* for insurance and £1 for loan||7% at selected retailers = £35. Credit = £7||£7 earned minus £3 fee = £4. £39 for current account holders only - cashback and reward. Holders of a Barclays mortgage, insurance and loan can earn £46|
|Halifax - Reward Account||Switch = £125. Spend = up to 15%. Credit = £3||Cashback: 15% = £75||No fee = £203|
|NatWest - Reward Current Account||2% back on utility direct debits||2% = £10 (1% can be earned from purchases with selected retailers)||£10 earned minus £2 fee = £8 (or £3 from selected purchases)|
|Santander - 123 Lite||1%, 2% or 3% cashback depending on the category of the bill||Assumed council tax £200, water £35, gas and electricity £100, Aviva home insurance £15, phone, mobile, broadband and TV £150 = £7||£9.15 earned minus £1 fee = £8.15|
|The Co-operative Bank - Current Account||Credit = £4. Spend = up to £1.50 pm||£1.50 pm max (5p every time debit card used) + £4 credit||£No fee = £5.50|
|TSB - Classic Plus||Credit = £5 pm when holding two direct debits, £5 more with 20 debit card transactions||Spend = £5 pm (if 20 debit card transactions made)||No fee = £10|
|*Additional rewards are available to customers who take out buildings and contents insurance, Finer home insurance, Non-Advised Life insurance and Mortgage protection.|
As you can see, some accounts are still offering quite a bit extra, however you might have to move fast. "Free banking is already a myth as most customers will pay for certain services through fees, and for those accounts that do offer a reward, it seems that time is running out to take advantage," said Rachel.
Before you get too enticed by the account with the highest reward bonus, remember that your current account usage could negate any extra money you may earn. Rachel warns: "The banks who do still offer cash rewards might not be the best choice for customers who dip into their overdraft occasionally or fail to meet certain eligibility criteria."
So, while the Halifax Reward Account appears to be the best deal for switchers and spenders, keep in mind that its overdraft could wipe out any gains if you don't stay in credit, due to its daily usage fees. Instead, if you know you dip into your overdraft regularly, you might want to consider an account with a generous overdraft.
However, if you know you can keep your account in the black and meet the eligibility criteria, and aren't gaining anything from your current account, you can easily switch thanks to the Current Account Switch Service, which allows you to switch over to your new account in seven days, hassle-free.
Rachel reminds us that: "As with any current account, it is vital for consumers to compare the entire deal and switch if they find that their loyalty is wasted." So, while a current account with a reward might be for you, don't forget high interest current accounts, which could allow you to gain some interest every month, rather than a one-time boost.
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