Consumers looking to switch their current account over the summer holidays could be disappointed to find that banks have slashed the free cash offered when using the Current Account Switcher Service (CASS).
Research by Moneyfacts.co.uk has found that fewer brands are competing with upfront cash incentives over the past few weeks. For example, HSBC and Halifax have recently pulled their cash switching incentives of £175 upfront and up to £135 respectively, while first direct has slashed its offer in half and is now offering just £50 down from its previous £100 incentive. In fact, the research shows that there are now very few cash incentives, or equivalent gift card perks, around for customers to choose from.
Current account analysis
|Providers with upfront switching cash incentives||Switching cashback||Cost of borrowing £300 using an arranged overdraft for 15 days||Cash incentive minus overdraft charges after 12 months|
|first direct 1st Account||£50 (was £100)||£1.96 pm / £23.52 pa||£26.48|
|M&S Bank Current Account||£100 gift card upfront, plus £80 gift card after 12 months*||£1.96 pm / £23.52 pa||£156.48 (gift card)|
|Providers with recommend a friend cash incentives||Cashback||Cost of borrowing £300 using an arranged overdraft for 15 days||Cash incentive minus overdraft charges after 12 months|
|Nationwide Building Society FlexAccount||£100 (friend also gets £100)||£2.33 pm / £27.96 pa||£72.04|
*Existing M&S Bank credit card customers can get up to £220 when they switch and stay. Cashback may be dependent on minimum funding of the account or other requirements (direct debts, using the current account switcher service etc.) Source: Moneyfacts.co.uk
Rachel Springall, finance expert at Moneyfacts.co.uk, said: “Clearly the summer season is the wrong time of year for consumers to grab a sweetener when switching their current account or indeed when recommending a friend.
“It will be disappointing news for those who waited for the summer holidays to move their account, as they would have missed out on the most lucrative free cash offers. The best time to spot competition on switching sweeteners is typically at the start the year, as banks tend to bring out offers to entice new customers looking to rework their financial products as a new year’s resolution.
“Current account providers generally offer banking perks to gain new customers who could then go on to take out other financial products with that brand, which is why it’s common to see other incentives offered to existing current account customers.
“Just because an account offers a cash sweetener, doesn’t necessarily mean it’s the best possible choice – particularly if customers were to dip into their arranged overdraft each month. Free cash can be eroded over time, so it’s important to keep this in mind and compare overdrafts along with any perks.
“There are other accounts available that may not pay sweeteners upfront, but in fact pay a monthly reward. These may be more appealing to consumers who can meet the eligibility criteria and indeed, Barclays Bank, Halifax, The Co-operative Bank all offer the option to earn rewards every month.
“It goes to show that if consumers are thinking about switching their bank account, then they must not wait around for too long to do so. It doesn’t take long thanks to the CASS and it’s worth considering if their current account isn’t offering them the best possible package.”
Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.