Banks are once again battling for customers with generous switching incentives, with several offering £200 or more to anyone willing to move their current account.
For those prepared to jump between providers, the rewards can quickly add up, prompting consumer champion Martin Lewis to ask if now is the right time to open a “burner bank account”.
Taking to social media on Friday, the money expert said: “Is it time to get a burner bank account to make serious money switching? Eight banks are paying £175+ to switchers right now and, done right, you can do it multiple times (ie make £1,000s).”
The idea is to keep your main bank account untouched while using a spare account to repeatedly switch between banks offering cash bonuses. But is it really that simple? Here, we look at the best switching deals available, if opening one of these accounts is a sensible strategy, and whether chasing the cash is worth it.
HSBC=£220
HSBC is offering the biggest mainstream switching bonus, paying £220 to eligible customers who move to its fee-free bank account. It also includes access to HSBC’s global money account for spending abroad. To qualify, customers must switch via the Current Account Switch Service (CASS), transfer two direct debits, pay in £2,000 and spend £500 on their debit card within 60 days.
first direct=£200
Known for its highly rated customer service, first direct is offering £200 to customers switching to its fee-free 1st account. It also comes with access to a 7 per cent regular saver and fee-free overseas card spending. Customers must switch two direct debits, pay in £1,000 and make five debit card transactions.
Barclays=£200
Barclays is paying £200 to customers who switch to its standard bank account. The account has no monthly fee and gives access to Barclays cashback offers. To receive the bonus, customers must complete a full switch, move two direct debits and pay in £2,000.
NatWest=£200
NatWest’s £200 incentive is available on its Select, Reward and Premier accounts. The Reward account also pays monthly cashback to eligible customers, although it carries a £2 monthly fee. To qualify for the switching bonus, customers must pay in £1,250 and log into the banking app. Premier has no fee but is only available available to customers who meet eligibility criteria (such as earning at least £100,000 a year or meeting the bank’s wealth requirements).
Co-operative Bank=up to £200
The Co-operative Bank pays its £200 reward in stages rather than all at once, with £125 paid shortly after switching and the remainder over the following three months. Its fee-free current account also gives customers access to a regular saver paying 7 per cent interest, while the Everyday Extra account includes travel insurance, breakdown cover and mobile phone insurance – although it has a £12 a month fee.
Santander=£180
Santander is offering £180 to customers switching to its Everyday, Edge, Edge Up or Edge Explorer accounts. Customers must pay in £1,500 and switch two direct debits. While Everyday is a fee-free no-frills option, the Edge range charges fees, but pays cashback on household bills and supermarket spending, with higher-tier accounts adding travel insurance and breakdown cover. Current fees are £3 a month for Edge, £5 a month for Edge Up and £17 a month for Edge Explorer.
Nationwide=£175
Nationwide’s £175 incentive is smaller than some rivals, but its FlexDirect account remains one of the strongest all-round current accounts, paying 5 per cent interest on balances of up to £1,500 for the first year. Eligible members have also received Nationwide’s annual fairer share payment in recent years, although there is no guarantee it will continue.
Should you get a burner account?
Rachel Springall, finance expert at Moneyfactscompare.co.uk, says that using a separate account purely for switching can make sense, provided it is a straightforward, fee-free one.
“The ‘burner’ or ‘fodder’ accounts would typically need to be those which are fee-free, and do not have any excessive minimum funding requirements,” she said, pointing to accounts from Chase, Monzo, Starling, Halifax, Bank of Scotland and Santander as suitable options.
Using a spare account means your salary and household bills stay with your main bank while you complete each switch.
Can you really make £1,000?
In theory, yes. Switching between several banks over time could earn around £1,000 in cash bonuses, but experts warn it takes organisation and patience.
“It’s less straightforward,” Andrew Hagger, founder of MoneyComms, says. “Setting up a burner account may work but with most of these deals you need to overcome a few minor hurdles.”
Most banks require customers to use CASS; transfer existing direct debits; pay in between £1,000 and £2,000; and make a certain number or value of debit card transactions before the money is paid.
The bonuses also don’t arrive immediately – HSBC, for example, pays within 60 days of customers meeting all the qualifying criteria.
Springall says that switching bonuses can be “a great financial boost”, particularly for people who already have more than one current account: “There is no reason why someone cannot hold more than one current account at a time, so this is ideal for those who might want to keep their main account and move the spare one,.”
But she warns that the upfront payment should not be the only factor when choosing a bank: “It is also important to remember that a bank account should never be taken purely on an upfront switch offer, especially if someone could get a better package elsewhere. One size does not fit all with current accounts.”
She also believes some accounts are worth keeping once the switching bonus has been paid. “It’s certainly worth switching at least once – if you move to Nationwide, for example, you may wish to stick with them as they have been paying an annual fairer share payment of £100 for the last few years, although there’s no guarantee this will continue.”
For anyone unsure, Hagger’s guidance is to do it once and see how you feel about the whole experience: “If you’ve got the time and inclination to do it again then why not bag another cash deal.”
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