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Move your current account and net £100
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Abbey and Alliance & Leicester are relaunching the £100 incentive to switch. We compare the other deals on the market
It's time to switch your current account. From Monday, Alliance & Leicester (A&L) will be offering a £100 windfall to anyone who signs up for its Premier account. Not only will you receive a cash reward; this is also one of the leading deals on the market.
The Premier account pays 0.50% on balances up to £2,500 and it includes free European travel insurance. Customers can also benefit from A&L's market-leading overdraft – you can borrow up to £2,000 interest-free for the first year. Thereafter you'll be charged 50p a day for being overdrawn although this is capped at £5 a month. To qualify for the account you must be 21 or over, pay in at least £500 a month and not be an existing Santander current account customer (Santander owns A&L and Abbey).
The £100 sign-up offer also applies to people who apply for Abbey's Preferred Overdraft account. Customers receive a free overdraft for the first year, after which an annual rate of 12.9% is charged and the in-credit rate is 0.50% - the same as on A&L's Premier account. However, you must pay in at least £1,000 a month.
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Cash incentive
The Santander brands aren't the only providers offering a cash incentive for new current account customers. First Direct will also give you £100 if you switch to its 1st Account, although customers are required to deposit at least £1,500 a month in to the account and no interest is paid on balances in credit.
HSBC is the other provider with a switching offer. If you sign up for its Bank or Plus account before 4 October you'll receive a £50 reward. The Bank account is HSBC's standard current account and it pays no interest on balances in credit, while the Plus account offers extra benefits, but it has a £12.95 monthly fee – although this is reduced to £6.47 for the first three months. The benefits include Worldwide travel insurance, breakdown cover and access to preferential products such as a regular saver account which pays 8.0%.
But why do these banks need to offer people inducements to switch to their accounts?
The truth is that most current account customers are unwilling to switch banks because they believe the process is likely to prove complicated and potentially expensive.
Visions of hours spent toiling over paperwork and charges accrued due to missed standing order and direct debit payments convince them to stick with their current bank or building society – even if their account offers poor value for money.
However, a few years ago, banks gained the ability to transfer standing orders and direct debits automatically for you.
As a result – and because it’s in their interests to attract new customers – most banks now have dedicated account-switching teams that will manage the entire process for you.
The message, then, is to vote with your feet and make sure you’re getting the most out of your current account.
by Jessica Bown, finance journalist writing for moneysupermarket.com
