High interest rates, switching bonuses, free insurance – there’s never been a better time to do something about your current account.
The market for your money is the most competitive it’s ever been – meaning extra cash in your pocket! But surely it’s hassle you don’t need? Well it’s actually really simple to do, and if you combine a few different deals, you can get a fair amount extra. I was about £300 better off twelve months after leaving Barclays for Halifax and Santander.
Here are the 6 Ways to Make Your Bank Account Pay You:
Just like your gas and leccy, you can now switch your current account to another bank, In fact it’s even easier.
The switching guarantee introduced in September 2013 means your old and new bank have to talk to each other to ensure all money and direct debits are transferred in seven working days. Plus it will transfer any other payments that are sent in the first twelve months. You should make sure you let your work and anyone else who sends you money know though! The downside is that your old account is closed completely.
2. Get A £150 Bonus
Many of the banks are offering switching bonuses when you move your bank rather than just open an new account.You will have to pay in a certain amount each month (from £750 to £1000) and set up some direct debits.
- Halifax give £100, but you can get an extra £40 if you go via Quidco
- First Direct give £100
- Co-op give £100
- Clydsdale Bank are offering £150 until the end of February 2015
WORTH UP TO £150
3. Max Your Interest
Most high st banks are offering some fantastic interest rates, much higher than most ISA and savings accounts currently on the market. All estimated figures below are for a basic tax payer. Rates are generally variable though – this means they could change them, so keep an eye on your post. The best right now are:
Lloyds: The Club Lloyds Current Account pays 4% AER before tax on savings between £4,000 & £5,000. However you must pay in £1,500 a month and have two direct debits to avoid a £5 per month fee.
(WORTH up to £157 per year)
Santander 123: If you have between £3,000 and £20,000, pay in £500 a month and have two direct debits then you’ll get 3% AER interest before tax. There is a £2 per month fee.
(WORTH up to £480 per year)
First Direct: Pay £300 a month for twelve months into their customer only Regular Saver and you’ll get 6% AER. Regular saving accounts explained in our 4 Savings Account Basics post.
(WORTH up to £93 per year)
Halifax: They give you £5 per month when you pay in £750 a month, stay in credit and have two direct debits.
(WORTH up to £60 per year)
Nationwide: You can get 5% AER before tax on a balance up to £2500 when you pay in £1,000 per month, but only for the first year.
(WORTH up to £98 in the 1st year)
TSB: You can get 5% AER before tax on a balance up to £2,000 when you pay in £500 per month to the TSB Classic account. You don’t need to switch any direct debits.
(WORTH up to £78 per year)
Other terms & conditions will apply to read through before switching or opening any of these.
Read more about how I use more than one current account to maximise the interest on my savings.
4. Get Cashback On Bills & Purchases
Santander’s 123 account gives 1% cashback on water bills, council tax and Santander mortgage payments, 2% on gas and electricity, and 3% on phone, internet and TV bills (though check your provider is on their list). It does have a £2 per month fee, but your cashback should more than cover it.
Halifax and Lloyds have offers that vary for each customer. You have to log in to your online banking to activate them. My experience of Halifax has been more miss than hit.
**Dec 2014 update**
Now Barclays and Santander have got in on the act too. Similar to the Halifax system you’ll be offered deals with specific retailers which you need to activate. They’re often one off, so make sure you use them for the biggest purchase if you shop at those stores regularly.
Learn more in our about cashback in our Be Clever Basics post.
5. Get Free Travel & Breakdown Insurance
Paying already for travel insurance, mobile phone insurance, breakdown cover? It might be worth your while getting one of these accounts from Nationwide.
The free Nationwide FlexAccount has free European travel insurance, while the £10 a month FlexAccount Plus isn’t so expensive when you consider it gives worldwide travel insurance and mobile phone insurance for you, your partner and kids at the same address, plus breakdown cover for the account holder.
6. Open More Than One Account
There’s no reason why you can’t have more than one account, in fact it’s good if you do.
You can move money between accounts to satisfy any interest or cashback requirements. As long as you are in confident you will keep on top of them, you can spread direct debits around too. If you aren’t, why not set up a couple to the charities of your choice for a few quid?
STABILITY & CREDIT APPLICATIONS:
A NOTE FOR PEOPLE WANTING A MORTGAGE
The only reason I’d say not to switch is if you are planning on getting a mortgage. Not only does opening an account require a credit application, but lenders can look for long term stability, which people often have via their bank from home or Uni.
This doesn’t mean you can’t open a second (or third) account then switch your main one after completing on the mortgage, but don’t apply for any credit (phone contracts, credit cards etc) for at least three months (six is better) before you go for a mortgage.
19 thoughts on “6 ways to make your bank account pay you”
Your information is so out of date some of which over two years, sorry but can’t see the point of this.
Thanks Bill. As it’s a blog, articles are for the moment in time they were written – a bit like a news site. There are new articles covering many of the same topics.