Natwest and RBS Rewards account to change

Cashback on bills is being scrapped for account holders. 

For years I’ve been shouting about the benefit of having a bank account with Natwest, RBS or Santander. The reason? Each of them has an account where you can earn cashback on your big bills, including Council Tax, energy and mobile phones.

This can be a handy little earner. We’ve been making around £7.50 in cashback every month with Natwest, before the £2 monthly fee. That works out as £66 each year.

Of course, I’m pretty good at getting my bills to be as cheap as they can be. If you have higher bills than us,  pay for things we don’t like Sky TV or have expensive mobile contracts that amount would be a lot higher for you.

However, from February 2020 that short list of providers offering this service shrinks to just one – Santander. Instead at Natwest and RBS you’ll get set rewards worth up to £5 a month before fees.

So is it worth sticking with them? Or should you look to switch to another bank?

How Natwest and RBS Reward Accounts are changing

What you’ll get

On the 1st of February 2020, the Natwest and RBS Reward accounts will no longer give 2% cashback on bills. Instead, they’ll both offer the following:

• £4 a month for having two Direct Debits worth at least £2 a month each
• £1 a month for checking your mobile banking app each month

The fee will remain at £2 a month. This means you’ll get a maximum of £3 a month or £36 a year. For me that’ll be a loss of £30 a year, and it’ll likely be higher for many of you.

Should you switch away?

The £36 a year you’ll potentially make from the new rewards system is going to be a lot less than what you are currently getting from your cashback on bills. And it’s less than you can make elsewhere.

You can still get cashback on bills from Santander

One option you’ve got is to open an account with Santander, which offers two accounts with cashback on your bills – The 123 account and the 123 Lite account.

Both offer the following:

• 1% cashback on water bills, Council Tax (and the first £1,000 if you have a Santander mortgage)
• 2% on gas and electricity (and Santander home insurance and life protection)
• 3% back on mobile phone bills, home phone bills, broadband and TV packages

Santander 123 vs Santander 123 Lite

Now each account has a different cost. The 123 Lite is just £1 a month. The main 123 account is a huge £5 a month, but you also get 1.5% interest on savings up to £20,000.

Personally I’d always recommend the Lite version. Though 1.5% interest is better than you can get in many accounts, it’s not the best. And when you factor in the extra £4 to the fee, it’s actually closer to 1.25%.

I’ve written here about savings alternatives where you can get up to 5% in interest.

Is the 123 Lite cashback better or worse than Natwest and RBS Rewards?

How much you make with Santander does depend on the size of your bills. There’s a handy calculator to help you work out what you’ll earn. 

Personally I’ll make less cashback than I do with Natwest largely because it’s only 1% on Council Tax – my highest bill. Though there’s 3% rather than 2% on phones, internet and TV, it won’t cover those losses as these are all pretty low cost for me.

I think I’ll be getting £4.50 every month after the £1 monthly fee, totalling £54. That’s £12 less than I get right now, but £18 more than the new Natwest scheme.

Switching away from Natwest or RBS

Making a partial switch to Santander

When you switch banks you’re usually making a “full switch”. This closes your old account down. You need to do this for the banks offering things like free cash. But I wouldn’t do it for this Santander 123 Lite account. 

Instead you can just open up your new account and then ask for a partial switch. This means you get to choose which direct debits you want to move over, and you also don’t close your Natwest or RBS account.

Once that’s sorted, you can use your now useful Natwest or RBS account to switch for a cash bonus – and perform the full switch.

Make a full switch for up to £175 in cash

If you’ve not taken advantage of all or any of the bank switching incentives available from other banks, then you could get up to £175 (at the time of writing). Much better than £36. I’ve explained more about how bank switching works here. 

At the moment (November 2019) you can get.

• £175 from HSBC
• £100 in vouchers from M&S Bank
• £100 from Nationwide (if a friend refers you)

You can see the latest offers in my regularly updated list of bank incentives here.

What I’ll be doing

First, I’ll absolutely be opening a Santander 123 Lite account to continue earning cashback on my bills. Since I make more from Natwest I’ll wait until January to do this.

If I hadn’t already switched for incentives all the banks that offer this I would also be switching away to get a cash benefit. However since there aren’t any more I can nab right now, I’ve got two options. Close the account or stick with it.

If I keep it, the £36 a year is better than nothing. However, I will have to find two new Direct Debits to pay out (once I’ve moved overall the bills to Santander). You will probably have plenty for this, though I’m already doing this at Halifax and Barclays for their similarly valued reward accounts. 

So the easier option is to close it, But if I make the two Direct Debits ones for charities, it basically means I’ll be giving an extra £4 a month to good causes alongside my usual donations.

There are also some decent extra cashback offers with partner brands with both Natwest and RBS Reward account which I’ve used from time-to-time. So keeping the account could save me some further cash that way too.