Is the new RBS / Natwest Reward account any good?

With the news that Santander were upping the fees on it’s admittedly very good 123 current account, it was only a matter of time before someone tried to undercut their offering and tempt disgruntled customers away. Well from 12th October, Natwest and RBS are launching a new account that could do that. So will I be one of those switching?

I’ve written about whether you should stay with Santander when the fee rises to £5 a month in January. For me it doesn’t make sense to stay as the cashback on bills was unlikely to cover the cost.

It’s a different story with the new RBS/ Natwest Reward account and I plan to open a account to take advantage. I’ve worked out that I’ll make £5 a month profit on my bills after the fee which is pretty good for doing nothing. It’d be more if I hadn’t negotiated such a good broadband/TV/phone deal.

Here’s a little more info and answers to some questions you might have.

How much does the RBS Reward cost?

It’s £3 a month, so £36 a year. You pay monthly.

What do you get for the £3?

You’ll receive 3% cashback on Direct Debits for:

• Council Tax,
• gas, electricity and water bills,
• broadband, landline and TV bills
• mobile phone bill

So if these bills add up to £100 a month you’ll break even. Any more and you make money. My bills at up to £270 each month so that’s £8 cashback.

There’s no cap on what you can earn and as yet no information on whether some companies are excluded.

Do you need to switch?

Nope! You can just apply to open this account, which is what I’ll be doing.

You can earn up to £150 if you instead switch to First Direct, Clydesdale or Yorkshire.

However, using the switching service will transfer all your existing Direct Debit across, which can save a huge amount of time.

Are there any catches?

I plan to use this just for my bills, which means my savings will be elsewhere. It’s really important that you keep an eye on your balance and move enough money in each time your bills are due. If some of them change each month (e.g. mobile usage) it’s worth having  small buffer in there just incase.

You don’t need to have any direct debits – though you’ll need them set up to get the cashback – and you don’t need to pay any money in each month.

How to you claim the cashback?

This is a little awkward. Your cashback is moved into a MyRewards section of your online or app banking. Once you reach £5 you can transfer it to your current account, donate it for charity, or exchange the money for vouchers which could be worth more (a bit like Tesco Clubcard points).

What interest do you earn?

Unlike Santander 123 which offers 3% interest on balances between £3,000 and £20,000, you won’t earn any interest on the RBS / Natwest Reward account.

You’ll be better off keeping your savings in a different current account. I’ve got the TSB Classic Plus (5% on £2,000) and plan to open a Lloyds one too (4% on £5,000). If you have a big chunk of cash and want just one account, the Santander 123 is still a good bet.