The banks are battling to win your custom by offering big switching bonuses on their current accounts again. Switch now and you could bag up to £295 over the next 12 months.
Who's offering the biggest bonus?
TSB is offering the most generous switching bonus. Switch via Moneysavingexpert before 26 June and you will earn a £130 bonus - but be aware, do so direct and you’ll get nothing.
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To get the bonus you have to click on the Moneysavingexpert link, then use TSB’s switching service to fully move to the current account. You must also pay in £500 within 28 days and set up at least two direct debits.
The TSB Classic Plus account also pays you £5 a month as long as two direct debits pay out that month and a further £5 a month if you use the debit card to make 20 or more transactions that month.
You can also earn three per cent interest on balances up to £1,500 if you register for paperless banking and pay in £500 a month.
All in all, you could make £295 if you switch and keep the account for 12 months while meeting all of the conditions.
Is it the best account?
If you are looking for a new main current account, and you don’t use an overdraft, then the TSB account is certainly rewarding thanks to that combination of a high interest rate, generous monthly rewards and a healthy switching bonus.
However, if you regularly dip into the red the TSB account is best avoided. An arranged overdraft has a whopping 19.84 per cent AER interest rate, plus a £6 a month usage fee. Unarranged overdrafts cost £5 a day if they are under £25 or £10 a day if you go over £25 capped at £80 a month, plus the 19.84 per cent AER and the £6 a monthly usage fee.
If you do need an overdraft then a better option is First Direct. It has a £250 interest-free overdraft and, if you go over that amount, the interest rate is 15.9 per cent AER, one of the lower-cost overdrafts available at the moment.
Plus, First Direct is also offering a generous switching bonus at the moment. You’ll get £125 if you switch via Moneysupermarket before 3rd July, or £100 if you switch direct.
To get the bonus you have to switch using First Direct’s switching service (via the Moneysupermarket link) and then deposit £1,000 within the first three months.
Why are the banks so keen to win my custom?
It may seem odd that the bank’s are battling to get you to switch to their current account when they have no interest in having your savings.
Savings account are paying pitiful interest rates and none of the big banks and building societies are showing any interest in offering rates that put them at the top of the best buy tables. They appear happy to let challenger banks win your savings, but they are fighting to win your current account custom with big interest rates and juicy switching bonuses.
The reason is savings accounts aren’t profitable for banks in a low-interest rate environment. It used to be they wanted your savings to fund their lending, but they can fund their lending more cheaply by borrowing elsewhere.
However, if they have you as a current account customer they know there is a good chance they can cross sell you lots of other products from mortgages to personal loans to credit cards. These are all profitable products and most of us are quite lazy and happy to get these from our main bank.
Plus, most of us rarely switch bank accounts so once the banks have lured you in, they know they are likely to have your custom for years, if not decades, to come.
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