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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.

Check out my bank switching offers page to see if Halifax is offering an incentive to open this account – in the past it’s been as high as £150 though £100 is more common.

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 two months 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.

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.