The current account switching battle has ramped up with three major high street banks introducing cash incentives within days of one another.
As of this week, Santander is offering joiners £130 cashback, whilst HSBC introduced a £110 cash payment with an additional £30 either to eat in, using Uber Eats, or to eat out, using The Dining Out Gift Card.
Last week, Lloyds Bank also began offering switchers a £100 cash bonus for changing to a new Club Lloyds current account or new Club Lloyds Platinum account.
Lloyds Bank is offering new customers £100 when they switch to a Club Lloyds bank account.
The bribes offered by HSBC, Santander and Lloyds are thought to be in an attempt to turn the tide against the challenger banks and replenish some of the customers lost to switches over recent months and years.
Santander has lost 51,796 more customers than it has gained over the past 12 months, according to official figures, whilst HSBC had net customer losses of 23,850 during that time.
Lloyds Bank has fared slightly better over the past year attracting more customers than it has lost, but it has still experienced net customer losses of over 215,000 since 2013.
Andrew Hagger, founder and director of Moneycomms.co.uk said: ‘The official Current Account Switching Service stats show that Neo banks Monzo and Starling Bank are growing fast and have mopped up more than 192,000 accounts from rivals in the last two years, so the high street big names need to attract new customers in a bid to stem the flow.
‘In its prime the Santander 123 current account was a firm favourite but it has been watered down many times over the past few years and doesn’t have anywhere near the appeal it once enjoyed.
‘HSBC seems to be offering one cash incentive after another, so perhaps it’s a marketing ploy which is delivering positive results.’
What do the offers involve?
As always the devil is in the details when considering these cash offers.
Santander’s £130 cashback offer is available to both new and existing customers when they switch to a 123 current account or 123 Lite account or to its Everyday, Select or Private Current Account.
The 123 Lite account has a £2 monthly charge but the 123 account comes with a £5 monthly fee.
To qualify for the cashback for either account, you will need to complete the switch within 60 days, set up two active direct debits and deposit at least £1,000.
The cashback will then be paid directly into your qualifying Santander account within 30 days.
Existing customers who have previously opened an account can still benefit from the cashback, if they complete a full switch from an account they hold elsewhere via the Current Account Switching Service.
As of July 2021, there were 3.9m customers earning cashback on their bills via Santander’s current accounts.
HSBC’s offering is a little more exclusive, aimed solely at those with either an Advance or Premier Account.
In both cases, to be eligible, you’ll need to pay in a minimum of £1,750 per month or £10,500 over 6 months.
To apply for the Premier account, you need to have an annual income of at least £75,000 and either a mortgage, investment or life insurance product with the bank.
Alternatively if you have savings or investments of at least £50,000 with HSBC within six months of opening your account you will also qualify.
The Club Lloyds current account comes with a £3 monthly fee, albeit this won’t be charged if you pay in a minimum of £1,500 each month.
The Platinum account, which has an additional £21 monthly fee, has various insurance benefits.
What other perks does each bank offer?
Santander already offers between 1 and 3 per cent cashback on various household bills, whilst its 123 customers can earn 0.30 per cent interest on balances up to £20,000.
HSBC offers its customers the ability to earn 1 per cent interest by saving between £25 and £250 a month with its Regular Saver.
It also offers an additional bung to new customers – £100 cashback for those opening an investment account with it.
Club Lloyds pays 0.6 per cent on interest on balances of up to £3,999, while those with sums of between £4,000 and £5,000 will earn 1.5 per cent on that balance.
This works out at around £39 interest if customers kept in the full £5,000 for a year – an interest rate of around 0.8 per cent.
It also enables its customers to choose a reward each year from 6 cinema tickets, an annual magazine subscription, 12 digital movie rentals.
HSBC’s Uber Eats voucher and The Dining Out Gift Card will be valid for 6 months after the account opens.
Are these offers no brainers? What about Nationwide?
HSBC, Santander a Lloyds are not the only banks offering big cash incentives.
Nationwide is paying £125 to existing members who switch their current account, while completely new customers will receive £100 for switching.
The Building Society also pays 2 per cent interest on balances of up to £1,500, for the first year, albeit dropping to 0.25 per cent thereafter.
But whilst cash incentives and interest rates can be a big draw, it is important to consider the other factors that make switching worthwhile.
Customer service, overdraft limits, saving perks and other niche lifestyle benefits are all factors that count for something.
Starling Bank, for example, which made a net gain of 17,769 switchers between January and March, according to the CASS figures, doesn’t offer incentives to switchers, instead relying on the strength of its customer service, its app and the fact its card is free to use abroad.
Virgin Money, which secured a net gain of 17,495 switchers during that period is currently offering joiners a £150 Virgin Experience Days gift card allowing its customers to choose between thousands of experiences from spa days and short breaks to sky diving.
Customers worried about dipping into their overdraft each month might be more tempted by switching to First Direct and benefiting from having the first £250 of any overdraft borrowing being interest free.
Andrew Hagger said: ‘Customers shouldn’t switch bank accounts just because of a cash bribe and certainly not without doing a bit of homework first – such as finding out details of any monthly fees, how much an agreed overdraft costs and how much it costs to use a debit card outside the UK for example.’
‘HSBC and Lloyd are trying to attract customers to their premium current accounts – Advance or Premier with HSBC and Club Lloyds or Club Lloyds Platinum, with the latter costing £21 per month.
‘An extra £100 will sound tempting to many people, but a few months down the line some will no doubt wish they had stayed put.’
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