The latest data from Moneyfacts.co.uk has found that the current account market is becoming less rewarding, as many providers have chosen to cut their switching incentives and other cash rewards over the last six months.
Halifax is the latest bank that's decided to reduce its monthly reward, cutting the cash available on its Reward Account from £3 to £2 per month as of the start of October. Before this, NatWest and the Royal Bank of Scotland had removed their £100 switching incentives, first direct replaced its £100 cash reward and TSB removed its monthly reward payments.
Looking for a rewarding account? Have a look at the top high interest current accounts
That said, there is some good news to report, as Barclays has just doubled its rewards for switchers (previously withdrawn in June). We can only hope that other providers will follow this example and get a more positive trend started.
However, as Moneyfacts.co.uk finance expert Rachel Springall points out: "While there is some good news to report, thanks to Barclays' latest reversal, consumers looking for something extra from their current account may want to take this latest shake-up as an opportunity to shop around, especially as it's quick and simple to switch using the Current Account Switch Service (CASS) with most brands."
|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||Cashback available (at selected partners), £14 pm credit. Extra £10 for mortgage, £2* for an insurance plan||Cashback available at selected partners. Credit = £14*||£14 earned minus £3 fee = £11. Holders of a Barclays mortgage, an insurance plan can earn £23*|
|Halifax – Reward Account||Switch = £75 (was £125). Spend = up to 15% cashback available (at selected partners). Credit = £2 (was £3)||Cashback at selected partners: 15% = £75||No fee = £152|
|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, Santander home insurance £15, phone, mobile, broadband and TV £150||£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|
The table above displays some of the rewards available at the moment. As you can see, some providers still make it worthwhile to consider switching while others offer much less. In comparison, Rachel found that "just one year ago, Halifax offered switchers £125 to move their current account to them, plus an extra £3 per month, while today the free cash combination on offer is £62 less in the first year. Halifax had even offered £5 per month to customers in January 2017, before chopping it to £3, and starting this month, customers will receive just £2 per month as a reward for their loyalty."
With cash rewards starting to disappear, consumers may want to look elsewhere to get something extra. High interest current accounts may not offer simple cash rewards (though some do), but you can still get quite a nice bonus if you manage to keep your current account topped up every month.
"It's clear to see that the free cash cut-down isn't an anomaly, with it happening across various brands over the last six-month period, and it's possible that providers will continue to rein in their rewards as we enter a period of economic uncertainty," Rachel concluded. "While one provider has gone the other way recently, there's no telling whether this is the start of a more positive trend in the market or just a one-off. With this in mind, any customers who have yet to take advantage of switching incentives may want to act quickly, before more cuts take place."
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.