Halifax Reward account review: Is it any good?

A new fee and new rewards make this account a very different proposition. Should you ditch it?

When the bank switching service first came into play back in 2013 I moved over from my ancient Barclays account to the Halifax Reward account.

Not only did I get a nice £100 bonus I also got £5 a month, every single month. That dropped to £3 a month, then £2 a month. I’ve kept it just because it was earning a little bit of cash every year – but it’s not one I’ve recommended for a while now.

Well, in June it changed again. Here’s how the account works, and a trick to make it worthwhile. But first news of a new switching bonus!

£100 switching bonus

On the 4th August 2020 Halifax brought back a £100 switching bonus!

To get this you need to open up a new Halifax Reward or Ultimate Rewards account before the 8th September 2020. You also can’t have received a switch bonus from Halifax since April 2018.

The bonus will be paid on the day your switch completes.

And good news for existing Halifax customers, you can still get the bonus if you open up either of those accounts and switch a non-Halifax account into it.

So say, like me, you’ve got the Halifax Rewards account already, you can open a new Ultimate Rewards account. And visa versa. Or if you have any other kind of Halifax account you can open up either account.

The standard Rewards is the best option for most people as the Ultimate Rewards account will cost you £17 a month (it comes with insurance products on top of the usual Rewards). But you can of course cancel your account once you’ve got the £100 bonus.

If you’ve not switched before then check out this guide to how it works.

Web chat with Halifax

Here’s confirmation from Halifax via webchat that you can open up a new account even if you already have one of the accounts.

How it works

A new monthly fee

The Reward account charges a £3 monthly fee, meaning it’ll cost you £36 a year. This isn’t unusual – many current accounts with benefits have a similar charge, including Barclays Blue Rewards, Natwest Reward and Santander 123.

However you won’t pay the fee if you pay in £1,500 every month. Most people should be ok with this if they pay their salary in – you need to earn just under £22,000 a year to take home this amount after tax and National Insurance.

If not you can pay in smaller amount from another account, eg £500, withdraw it, pay it back in, then repeat it once more.

Different rewards

The £2 monthly reward will be replaced by something called Reward Extras. To be eligible for this you’ll need to either spend £500 a month on your debit card or keep £5,000 in the account every day of the month.

You need to pay in the £1,500 a month every month to get your reward (which you should be doing to avoid the fee), and you need to stay in credit.

If you do either of these you then get to pick a reward. These are:

  • Three digital magazines a month from a selection of Hearst magazine titles (eg Good Housekeeping, Red)
  • Two HD digital movie rentals from Rakuten 
  • One Vue cinema ticket a month 
  • £5 a month

The offer you choose is fixed for a year, so you can’t mix and match throughout the year. You can choose a new reward at the start of each 12 month anniversary.

Are the new rewards any good?

I’ll look at each benefit in turn:

£5 monthly reward

Well on the surface the offer seems good. £5 a month is better than the current £2 a month, as long as you are avoiding that monthly fee.

However you need to factor in the new requirements that mean you either need to spend or save a lot of money each month with Halifax.

So if you spend £500 a month on your debit card you’ll earn £60 a year (if you take the cash option). Compare this spend to using a cashback card and it’s the equivalent of 1% back – so no real difference to using the top American Express cashback cards.

However there is a workaround here – more on this in a bit.

The alternative option of £5,000 a month in your account for the same reward, isn’t any better. Do this for a year and it’s the same return as putting that money in a 1.2% savings account.

With rate cuts happening most months, that’s actually quite healthy in comparison to others, but right now you can still beat that and have flexibility to take money out. Plus with this Halifax offer, you’d need to have £5,000 in savings to get that rate, which we know many people don’t.  And if you have more you won’t be earning anything on that.

So ultimately you can get the same or better than this elsewhere.

It’s also worth noting that if you are a higher rate taxpayer you’ll be liable to pay extra tax on this bonus.

Free cinema ticket

Vue cinema tickets can vary between a fiver through to well over a tenner – it all depends on where you live.

Now if you have an expensive Vue cinema near you and go once a month then the return starts to look a lot better.  Say your tickets are £10 that’s an annual reward worth £120. If tickets are £12 it’s worth £144.

The code you’ll get each month can also be used for more expensive 3D screenings too, increasing the value (though I’m not a fan). It’s possible you might be able to combine it with other offers and savings too.

Even so it’s possible to save on cinema tickets in lots of different ways, such as 2-for-1 tickets with Meerkat Movies, and deals like this could work out as a better option. Here’s my guide to the best ways to save at the cinema.

Digital movie rentals

The vouchers will be worth £4.50 to use on Rakuten, which is enough for most HD films (occasionally some are £4.99). So you’ll be getting the equivalent of £9 back from your account. That means it’s got a value of £108 a year.

I think that makes this a decent offer if you regularly watch two new release HD movies a month.

If you don’t, or already have something like Sky Cinema, then it’s not worth it.

It’s worth remembering too that you can also often get free or cheap rentals from time to time in other ways (which I’ll share here). For example, Amazon often runs £1.99 rentals for Prime customers, while Chili has 99p selections.

The vouchers are valid for 35 days, and once you choose your film you’ve 48 hours to watch your film.

Free magazines

It’s not clear which titles you can pick from, but seeing as it’s Hearst you get the magazine from it’s likely to be one of these options.

Your picks will be digital-only, so you’ll need a tablet or computer to read them. It looks like the three magazines you choose at the start of the year will be the same ones you’ll get all year.

Personally I’d check first what magazines you can get for free from your local library.

The debit card trick

As I said, the requirement to spend £500 a month on a debit card to get the £60 a year is the equivalent of 1% back – which can be matched if not beaten by American Express (as long as Amex is accepted).

Yes you might be able to spend £500 at places that don’t accept Amex, but there’s an even better work around to make the spend and get the £5 every month.

Very simply, you use your Halifax debit card to pay off your American Express or other cashback credit card! 

I’ve done this for the last year now and it works – you’ve just got to remember to do this before your direct debit for your card goes out of your account. I actually moved my Amex payment date from the start of the month to the middle to give me a bit more leeway.

An alternative is to use your debit card to top up a Revolut or Monese bank account, and then transfer the money back.

Thanks to newsletter subscriber Doogie Brodie for getting in touch to suggest this.

Should you get it / stick with it?

Though the equivalent 1.2% rate on interest is actually not bad compared to most other accounts, you can still beat it. Plus it’s so restrictive to require £5,000 in the account every day of the month to get the reward.

But thanks to the debit card hack, I think it’s worth getting one of these accounts to claim the reward.

As to which one you choose… though cinema tickets could work out the best value it’s still early days as to whether new films will get released this year, so I’d go for – and have – the £5 monthly reward.

Of course if you don’t want too many accounts it might be better to check out other banking offers elsewhere with free cash and other rewards.

Andy’s podcast

Listen to Cash Chats, Andy’s twice-weekly podcast. Episodes every Tuesday and Friday.

45 thoughts on “Halifax Reward account review: Is it any good?

  1. So let’s say I’m not going to have the full £1500 getting paid in this month. Is there I can get it by moving my own money around? Like bank transfer or would it have to be paid in to the account in cash over the counter or another way?? Thanks

    1. Yes, absolutely. You can do a bank transfer in smaller amounts. So you could pay in £500, withdraw it to another account. Pay it back into Halifax, withdraw it again. And then pay it in again for a final time. That’s your £1,500 sorted for the month.

  2. Hi Andy, I am considering switching to the Halifax Rewards Account but I just need clarification on your comments about topping up a Monese/Revolut account with a debit card payment. Can you do this as I think moving money to another bank account is classed as a money transfer which doesn’t count for the Rewards Extras offers?

    1. It works! You’re using your debit card to top up the other accounts rather than a bank transfer to the sort code/account number

  3. Hmm – I have just switched from my old Santander 123 account since they kept on reducing the interest, then increasing the fees and finally changed which direct debit bill payments received the various 1, 2 and 3% cashback so in the end it just wasn’t worth it!
    Anyway – Halifax have already decided that I WILL NOT get the £5 reward for my first month because “I did not keep a £5000 balance every day”.
    Well – that is only because THEY created the account the next day after I started the “switch account” process, and put the £100 switching bonus in, but then did not switch my account for 7 days, so for the first 6 days it only had the £100 switching bonus in – i.e. the balance is less than £5000.
    I know it’s only a fiver, but it does seem a bit unfair that they started counting the days BEFORE they switched the account!

    1. That’s ridiculous. I’d definitely complain.

      1. Andy i didnt get my fiver halifax even though it came out of my account on the 28th on may and cleared on the 29th of may by American express halifax said 1st of july so didnt get it that month

  4. Hi – I am thinking of doing this. I do already have a Halifax current account which my wage / pension is paid into. Would I be able to transfer from the current account into the new reward account to help meet some of the 1500 critea? Or does the £1500 pay in need to be from a different bank? Thanks

  5. I am a bit confused, I used to have the Halifax Reward account , I still have the account but only have one DD going out and is now just called current account. I changed my main account and DDs to Santander when the interest was good. Will I need to change my DDs back to Halifax to get the £5 reward?

  6. Andy,

    If I put (for example) 5K in the account to leave in there, and then at the beginning of each month transfer £1,500 in, and then transfer it back out to where it came from at the middle of month, would I still qualify for the £5 per month reward? £60 per year is as good as I could get risk free from 6,500. I think ?

    1. Hi Robert. As long as the balance is always above £5,000 you’ll be fine to get the £5 reward. Personally I’ve gone with the £500 on debit card option each month as it gives me more flexibility. Then you could put the £5,000 elsewhere even at a lower rate and get money on top.

    2. I have the account. You can pay the £1500 in and transfer out on the same day. Andy’s blog is out of date. You won’t get anywhere near 1.2% elsewhere now

      1. True, but it’s better to get the same rewards via the £500 debit card spend AND put £5,000 in a different savings account, even though the rate will likley be less than 1.2%.

      2. Hi Andy,

        I’m going to go for the £500 monthly spend by debit card. I have a Monese account which can be topped by you guessed it? £500 monthly with a debit card.
        I’m assuming this method will count as £500 payment as it has done with my TSB spend and save account
        (30 payments monthly) by debit card in order to get £5.00 card reward, but only for the first 6 months.

  7. So the debit card payment to clear Amex or a credit card needs to be done manually?

    Isn’t this a pain as I imagine your DD still collects so the credit card/amex ends up in credit?

    1. Hi Nick, as long as you do this before the DD comes out it should be adjusted. You might need to do this a week in advance or so for that to happen – each CC company does this differently

    2. Hi
      I’m annoyed with myself for choosing the two digital films as my reward, the choice is really poor, basically straight to video quality
      I agree with your assessment that the best choice is £5 but for the life of me I can’t find any info on how to change your regard extra – can you help please??
      I don’t want to be stuck with you original bad choice!!
      Thanks

  8. Hello Andy!

    Thank you for your article, it is very insightful! I am new to switching banks and I wanted to ask you some questions, if that’s okay. Should I receive my salary into the acound as it is at around £1500, will I get taxed if I end up spending it as the month goes on? Also would I have to alredy have that £1500 amount in the old bank account in order to make the switch and receive the £100 reward?

    I am little bit confused as to whether a Rewards account can be used for the simple purpose of receiving your salary and day to day spendings. Thank you in advance!

    1. Hi Andreea

      No problem at all! Yes it’s absolutely fine for having your salary paid in each month and then spend with it.

      There’s no need to have any money at all in the old account before the switch, it’s simply to avoid the fee each month.

      Hope that helps!

      Andy

  9. Can you still earn £5 reward and get no fee on the account if you have 5k balance, then put an extra 1.5k in and take it (1.5k) out straight away?

    1. Hi Jason. Yes as long as the balance doesn’t fall below £5k then you’ll get the £5

  10. Hello, does anybody know if the first £500 paid using the debit card has to be paid in June or July 2020. By this I mean is the reward paid retrospectively?

    1. I made enquireies regarding the new Halifax reward account at my nearest Halifax bank,and was told to receive the £5 reward loyalty bonus I would have to pay in £5000 pluse £1500 per month pluse £500 per month on my debit card. I’m not too pleased about the £500 per month on my debit card

      1. Hi Brian,
        That’s incorrect. You do not need to keep a balance of £5k AND spend £500. It’s one or the other. Their official documentation states clearly:
        “Under the current offers, you can choose to earn a monthly reward by either:
        • Spending £500 or more using your debit card in a month; or
        • Keeping £5,000 or more in your account every day for a month.”

      2. Sounds like the staff hadn’t a clue what they were talking about.

  11. Hi Andy,

    Yes thanks I’ve seen that somewhere in the past. It does seem that since (2016) the changes to interest where banks don’t deduct tax on interest at source (the £1,000 allowance at 20% taxpayer and £500 allowance at 40% taxpayer) there are further issues.

    Apparently rewards do not seem to be covered by the bank interest allowances being classed as annual payments (fully taxable) not bank interest it seems banks pay the 20% tax (to continue?) on a gross value and leave you with the residue as the reward, hence higher rate taxpayers could be liable for more. An exception to this is where a reward is paid on accounts that charge a fee like Barclays Blue, the payment is called a miscellaneous one which is not treated the same as an annual payment so is fully taxable so of considerably less benefit.

    There is something on MSE from around 2016 on it see:
    https://www.moneysavingexpert.com/news/2016/07/halifax-barclays-or-co-op-bank-customer-you-may-need-to-pay-tax-on-your-rewards/

    I’ve not been able to establish (the girl didn’t seem to know when I called to sort the new deal out) whether the two direct debits are still required as there is no mention of that in the new reward terms letter so I suspect not(?)

    So it is more complicated that I thought it would be, cash rewards potentially not being as good as they initially seem compared to interest bearing accounts as the latter fall into ones personal interest allowances whilst the rewards do not. Higher rate tax payers carrying additional liabilities even if they have only used a tenners worth of their annual £500 interest allowance in a tax year.

    I guess as the amounts are likely to be relatively small it seems HMRC doesn’t actually require separate tax returns to be completed for this if a higher rate tax payer as presumably the admin for collection would outstrip the recovery, but if one has to complete a self assessment it should be included, I suppose as HMRC has to do the admin anyway on the return so it isn’t extra work for them.

    It would be quite funny if every PAYE higher rate tax payer with one job and an occupational pension getting annual interest under their £500 allowance sent in a self assessment for the £60 a year (at £5 a month reward they should pay another 20% tax on) result being flooding HMRC with loads of extra administration for the princely sum of an extra £12 a year tax recovery per person:)

    Cheers

    Mark

  12. Just went through the Halifax procedure chose the £5 a month I can meet the £1,500 pay in a month simply by rotating money between accounts £1,500 into Lloyds Club to get their interest and then to Halifax now keep a few quid in Halifax to stay in credit. The good part about this is the £500 on the debit card can be paid into council tax online American Express isn’t accepted, it can also be used in other places Amex isn’t accepted, failing that credit card balances can be paid online so the £500 a month should easily be achievable. One other thing is I don’t think the reward is taxable now similar to Topcashback and things like that as it isn’t termed interest but a marketing reward incentive/ discount etc, much the same as we don’t pay tax on the difference between a reduced item and the normal full price in a shop. I think when it started off in 2013 it was in place of interest but it has now morphed into a different account all together. Thanks Mark

    1. Cheers Mark, interesting thought about using it to pay credit card balances. In the small print I found details where the £5 reward is actually a £6.25 reward that’s taxed at 20% hence the warning that 40% rate taxpayers should probably declare the reward.

      1. 2 questions
        1- does your direct debit payments count to your £500 monthly target?
        2- will i get my £2 reward if i go to fee free account on june 1st for the month before?

        1. Hey Toby, it’s debit card payments only, and cash withdrawals don’t count. And sadly the free account has no Reward at all.

          1. Does direct debits count in the £500 spent each month

          2. No, unfortunately, it needs to be a purchase with the card

          3. Would it work if I topped up my Monzo/Revolut/Starling with a debit card? They all offer the option to do so and I’d assume they work the same way as credit card payments?

      2. Hi I’m on ultimate reward and I have a big overdraft hoping to have it paid off by July will them changing me to a current account affect my overdraft and any of my direct debits

        1. Hi Phil, It won’t affect your direct debits and it shouldn’t impact your overdraft either but it’s worth checking direct with the bank. If they haven’t already done this automatically then ask them to give you £500 interest-free on that overdraft. It’s a short term measure during lockdown just for a few months.

    2. Yep Andy way back in March I floated paying credit cards off for the £500 requirement it works did it last month at the beginning of the month and did it a few days ago that satisfies the requirement for £500 spend Cheers Mark

      1. Thanks Mark, so you did!

    3. I had a Halifax account years ago, as a small child. I’m now going to see if I can get another one, im currently with Lloyd’s but my card has been cloned 7 times this year. Its driving me crazy.
      Thank for all the input x

      1. That’s awful your card has been cloned! Any idea how?

Comment

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.