One of the easiest ways to earn a little cash is to get a cashback current account for your bills.
There are four separate banks accounts from three banks – Natwest, RBS and Santander – offering money back when you pay your Council Tax, gas, electricity, phone and other regular bills. So which is better?
Right now there are lots of good reasons to switch your bank, including cash bonuses, high interest, fee-free travel money and low-cost overdrafts. But to take advantage of cashback on your bills you don’t even need to close your existing account. You can simply open up a new account as there’s no limit to the number of current accounts you can have – I’ve got 14!
You can even do a “partial switch” where you choose which direct debits you want to move, and this leaves your old account open. But if you don’t go via the switching service at all then you do have to manually move over all your direct debits.
The four accounts are:. Santander 123, Santander 123 Lite, Natwest Reward and RBS Reward (which is essentially the same as the Natwest account). Natwest has just announced the rate will be cut on its account in June. Here’s how they compare in light of this:
Cashback current accounts compared
Santander 123 Lite cashback current account
Cost per month: £1
Cashback:
- 1% on water, Council Tax and Santander mortgage repayments
- 2% on gas and electricity
- 3% on phone, mobile, TV and broadband
Interest: 0%
Requirements:
- Pay in at least £500 each month
- Log onto online or app banking every three months
- Go paperless
- Have at least two direct debits
Santander 123 cashback current account
Cost per month: £5
Cashback:
- 1% on water, Council Tax and Santander mortgage repayments
- 2% on gas and electricity
- 3% on phone, mobile, TV and broadband
Interest: 1.5% on balances up to £20,000
Requirements:
- Pay in at least £500 each month
- Have at least two direct debits
Natwest Reward cashback current account
Cost per month: £2
Cashback:
- 2% on water, Council Tax, gas and electricity, phone, mobile, TV and broadband
Interest: 0%
Requirements:
- Pay in at least £1,500 each month
- Log onto online or app banking every three months
RBS Reward cashback current account
Cost per month: £2
Cashback:
- 2% on water, Council Tax, gas and electricity, phone, mobile, TV and broadband
Interest: 0%
Requirements:
- Pay in at least £1,500 each month
- Log onto online or app banking every three months
Which is best cashback current account for your bills?
It really depends on your circumstances.
The best way to work out which will pay out more is to use a reward calculator. Sadly, Santander seems to have axed its version, but you can still use the Natwest Reward cashback calculator. For the bills I pay it showed Natwest will pay me £80 a year after the fee.
The Santander 123 Lite pays less than the Natwest on Council Tax (my biggest monthly bill) and water, but also pays more on mobiles and pay TV. Since I’m on a super cheap mobile contract, and I use NOW TV rather than Sky or Virgin, this increase would be negligible for me – even with the lower monthly fee.
If you don’t have any savings, or you’re already taking advantage of higher interest current accounts, forget the full 123 account. I had this and switched to the Natwest account in January 2017 when the 123 fees jumped to £5. This fee wipes out all of the cashback unless you have the full £20,000 in there. But even then you can do better on the interest.
So the Natwest or RBS accounts appear to be the highest paying option for me – making it my top pick. Of course, if you have really high bills for your TV then that could put the Santander 123 Lite in the lead (though I’d argue you should be paying a lot less for this!)
One benefit the Santander 123 Lite has over Natwest Rewards is the money is paid straight into your account. With Natwest it sits in a separate Natwest Rewards wallet and you have to transfer it over, which is a bit of an unnecessary faff.
How to know if a cashback current account is right for you
With all of these accounts you need to check your bill provider is included. Not all are – Giffgaff for example isn’t. You can check on the bank’s websites.
If you don’t pay all the bills, you’re less likely to make the fee back. If you share bills, you might want to open a joint account to get the most cashback, but this does mean you’re financially linked to the other person, which can affect your credit rating.
* This was originally written in July 2016 and has been updated
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