Two banks – Halifax and M&S – have slashed their bank switching offers, and I hope it’s not the start of more cuts.
Regular readers will know I’m a big bank switching fan. I’ve made hundreds of pounds moving my current accounts to different banks, taking advantage of special switching bonus payments. But it could be about to get more difficult to get this kind of free cash.
Halifax have announced they’re reducing the bonus they offer from £100 to £75 on 1st March 2017. This cut is on top of the change to their “reward” payment, which today went down from £5 a month to £3 a month.
I’ve also spotted that Marks & Spencer Bank has cut its bonus from £100 to £50, and halved its monthly gift card top up to £5.
If these two banks are a sign of things to come, you should think about switching NOW.
Should you switch to Halifax?
At the moment, the Halifax offer isn’t the best one available – you can get up to £150 elsewhere. So should you go for Halifax? Well, that depends on your attitude to switching.
If you think you’ll keep on switching to get further bonuses, you might want to get the Halifax offer now and hope other banks continue to offer free cash.
But if you’re only going to switch once (at least for the time being) then the bigger wins are £150 from HSBC and £125 from TSB.
Even then a bonus shouldn’t be the only reason you switch. Most of the banks that offer one of these cash incentives, also have extras such as interest-free overdrafts or high-interest regular savings accounts. So it’s worth looking at all these extras before deciding.
You don’t need to switch to get most of the other incentives
There are loads of other incentives on offer such as cashback on bills or up to 5% in interest on savings. But most of the banks who don’t offer a switching bonus don’t require you to switch bank.
You can simply open up a new account to access these extras. You may have to have a couple of direct debits and pay in a minimum amount every month, but you can cycle cash through your accounts to meet the latter criteria.
I’ve got nine – yes NINE – different current accounts right now to take advantage of all these offers – and only one of these is one I’ve switched. Ok, I might have switched that particular account a fair few times, but all the others I’m simply opened as new accounts.
What you need to know about switching bank
First, you need to apply to open a new account at your chosen bank. You will be credit checked, so don’t risk a rejection if you know you’ve a poor credit rating.
If you are successful, you’ll either be able to switch through the Current Account Switch Guarantee as part of your application or do it once the new account is set up.
When you use this seven-day switching service, the money in your old account and all your payments in and out are moved to your new account within seven working days.
Your old account is then closed, but any payments in will automatically be transferred for three years. That gives you plenty of time to update your details.
Depending on the bank you switch to, the bonus payment can take between a week and three months to reach your account – and then you can switch again!