Which banks give you money for switching?

If you are unhappy with your current bank, run away as fast as you can... and bag a switching bonus in the process.

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Perhaps you have had an account with the same bank since you were a kid, and have now decided that it’s time to look for a different one. Perhaps your bank has exhausted your patience after one too many admin blunders. Perhaps you’ve simply heard that switching your current account can generate a decent sum in free cash, and are tempted.

Whatever the reason why you are looking for a switching bonus, this guide has the insights you need to make an informed decision.

What’s a switching bonus?

A switching bonus is what you can get for transferring your current account to a new bank. So, it’s basically a bank “giving you money” for getting an account with it.

Switching bonuses are usually offered by big traditional banks, and they can be temporary offers lasting a few months.

They usually apply when you complete a full switch of your current account, and this will often include a minimum number of direct debits that you have to move. You won’t usually get a bonus for opening a new account instead (that’s why it’s called “switching” bonus).

Should I switch current account?

Well, the answer can be yes or no depending on your circumstances, so only you can determine that. But here are a few things to think about:

  • Are you with your current bank because it offers a good service? Or because you’ve been too lazy to do the switch so far?
  • Switching current account is pretty easy. Thanks to the current account switch service (CASS), all your payments and direct debits will be transferred automatically within seven days. The two banks will handle the process and you’ll barely have to lift a finger.
  • A switching bonus is a temporary benefit. Whereas your current account is something you use pretty much every day, even if you don’t really think about it. If the bank you are considering has a really juicy switching bonus offer but an awful mobile banking app, it may not be worth putting yourself through that kind of misery for a few quid.
  • Banks are awful at rewarding customers for their loyalty. Banks know that people really don’t want to go through the hassle of getting a new account; once they’ve got someone as a customer, they don’t need to do much to keep them. So switching is more likely to land you a better deal.

So, weight the pros and cons carefully. If you do decide to switch, ideally you want to pin down the best combination between a nice switching bonus, and a reliable bank that offers a good long-term service.

Why do banks offer switching bonuses?

To put it (very) simply, banks want your money. It’s how they are able to provide services such as mortgages and loans, which in return generate their profits.

But, as we mentioned above, people hate moving bank accounts. With the notable exception of a few personal finance junkies like yours truly, most people just want to have a bank account that works, and then not to think about it ever again.

So, for banks getting new customers is quite hard. Switching bonuses are one of the marketing tools available to them to entice people to transfer their accounts and money with them.

What happens when you switch?

If you go through with a switch, all your incoming and outgoing payments are automatically transferred to your new account. This includes your salary, all your bills as long as they are paid by direct debit or standing order, and most importantly any future payments you might receive from someone who has your old banking details (the service will also contact them to let them know the new ones!).

You can pick your switching date in advance, and even transfer an overdraft as long as your new bank agrees to it. Once it’s all done, your old bank will close your old account, and you’ll be all set with your new one. If your new bank offers a switching bonus, you’ll receive it once the switch is complete.

Using CASS is free, easy, and you are likely to end up with a better deal or a better banking experience. However, keep in mind that the service only works for current accounts, so savings accounts will not be transferred.

You will also need to update all your regular payments made via debit card manually, and these can be a lot (for example: your PayPal or Amazon accounts will have memorised your debit card details, not your current account details, so you’ll need to change them when you get your new debit card).

Pros and cons of switching

Pros

  • You can get a nice switching bonus (and use it to treat yourself!).
  • You can choose a bank that offers a better customer service, or a better mobile app… whatever you don’t like about your current bank, you don’t have to put up with it!
  • All payments are automatically transferred to your new current account thanks to CASS.
  • It’s free, and fairly quick; the switch has to be completed within seven days.

Cons

  • Other accounts you might have with the same bank, such as savings accounts, will not be transferred.
  • You will need to amend your debit card details.

Frequently asked questions

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