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Yesterday, Halifax announced the return of its popular £125 switching incentive. With HSBC having announced a £200 incentive earlier in the month, we thought we'd take a closer look and see how these new enticements measure up.
There are still a lot of people who stay with their current account provider simply because that's the account their parents opened for them, or it offered the best student incentives at the time. This could, however, mean that you're missing out on some juicy incentives.
For instance, Halifax has upped the switching incentive on its Reward Current Account from £75 to £125 (available until the end of July) and additionally offers £3 per month when customers adhere to certain criteria. If you're willing to wait for a year, meanwhile, HSBC offers £150 straight away after switching, and another £50 after a year of banking with them.
"The switching incentive from Halifax will likely appeal to those looking for a new current account with a high street brand," said Rachel Springall, finance expert at Moneyfacts. "There is more to be gained in upfront cash by switching elsewhere though, such as with HSBC, but customers need to make sure the account has the right overall package for them."
Indeed, if you look at the above two accounts, you will notice that only one of them currently appears in our Best Buys, and it's not the one with the highest incentive. There are, however, other accounts with switching incentives that do appear in Best Buy charts, such as M&S Bank's Current Account which offers £125 in the form of a gift card, plus a £5 top-up every month for a year provided certain conditions are met. Or there's the Co-operative Bank, which offers £110 in cash plus the possibility to gain £5.50 extra per month under certain circumstances.
"It's worth remembering that customers looking for a cash reward when they switch will likely have to meet certain eligibility criteria, which could mean funding the account by a certain amount, or setting up online banking or direct debits, so it's important to be aware of these before switching," explained Rachel.
Also keep in mind that while the promise of cash might be enticing, if your account is currently paying you a decent interest rate or offering other incentives, the short-term gains of switching might not outweigh the long-term benefits you're enjoying right now. Do the maths before you come to a decision, especially as most switching incentives require you to close your old account.
That doesn't mean that you should just stay with your current account, especially if it's offering no benefits to do so. There's a reason high interest current accounts are popular at the moment, and it's because if you can meet the criteria they set forth, they can offer interest rates that may beat inflation.
The only downside with these accounts is that they tend to charge high fees for going overdrawn. One account that may be worth a closer look, therefore, is first direct's 1st account, which sits at the top of the Best Buy chart for accounts with overdrafts, and offers a switching incentive of £100, provided certain conditions are met.
Which account will work for you may depend on your spending habits, whether you prefer to bank online or in branch, your income, and many other factors. One thing that you can be sure about is that the Current Account Switch Service, established in 2013, will ensure that switching is hassle-free and completed within seven days.
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