Current account customers who switch to Halifax using the official service can get a £100 bonus from today, in a move that might help revive competition among banks and building societies.
Those who earn hundreds of pounds from regularly switching accounts will hope the move from one of Britain’s biggest banks will spur others into action and lead to a resurgence in welcome bonuses.
The move from Halifax comes just days after data from the official switch service found fewer people switched bank accounts between April and June than in March alone, after banks shelved three-figure switching bonuses and closed current accounts to new customers.
Tumbleweed: It has been a barren wasteland in recent months when it comes to current account switch offers, as banks focused on existing customers amid the coronavirus crisis
And Halifax, part of Britain’s largest current account provider Lloyds Banking Group, announced the £100 switch bonus after the same figures found it had lost more than a net 92,000 accounts between January 2019 and June 2020.
However, it has still been the third most successful bank since the start of 2014, despite leaking switching customers over the last 18 months.
The switch bonus comes two months after Halifax introduced a potential monthly fee for the account it is now paying people to switch to, and increased the hurdles required to earn the monthly reward.
What is the offer?
Halifax is offering £100 to customers who switch to either its Reward or Ultimate Reward current account through the Current Account Switch Service.
The welcome bonus will run between 4 August and 15 September, and those who have received cash for switching to Halifax since April 2018 are ineligible.
The money will be paid in full before the seven-day switchover takes place, Halifax say. The bank last year offered a £135 switch bonus, but that was paid in two parts, with £85 paid upfront.
Both accounts themselves, which must be opened in-branch, online or by phone before the switch from an existing account can take place, do come with catches.
Its Reward account requires customers to pay in £1,500 a month or else it comes with a £3 monthly fee.
Those who switch to Halifax’s Reward or Ultimate Reward accounts can earn themselves £100
If customers want rewards, they must either spend £500 a month on their debit card or keep £5,000 in their account for a full month. Before the June changes, customers would earn £2 a month if they paid in £750, paid out two direct debits and stayed in credit.
In return, they can choose either two digital film rentals each month through Japanese streaming service Rakuten TV; three digital magazines a month from Hearst; a Vue cinema ticket every month or £5 a month paid into their account.
If a customer kept £5,000 in their account for a full 12 months and opted for this last option, this would be £60 a year, or roughly 1.2 per cent interest on the balance.
It also comes with an overdraft rate of 39.9 per cent APR, with no fee-free buffer.
|Bank||Old interest rate||New interest rate||Date of change|
|Santander 123 account||1.5% on up to £20,000||0.6%||3 August|
|Tesco Bank||1% on up to £3,000||0%||22 September|
|Nationwide FlexDirect||5% on up to £2,500 for 12 months||2% on up to £1,500 for 12 months||1 May|
|Starling Bank||0.5%/0.25%||0.05%||1 May|
|Club Lloyds||1% on £1 – £3,999.99
2% on £4,000 – £5,000
|0.6% on £1 – £3,999.99
1.5% on £4,000 – £5,000
Meanwhile, Halifax’s £17-a-month Ultimate Reward account offers those benefits, plus a £50 fee-free overdraft buffer, plus a range of packaged bank account benefits.
These include AA breakdown cover, home emergency cover, mobile phone insurance and worldwide travel insurance from Axa covering a trip of up to 45 days.
However, the travel insurance will not cover holiday cancellation or early return costs which result from the coronavirus.
It will cover medical expenses if you fall ill while somewhere the Foreign Office hasn’t advised against visiting, ruling out someone who becomes ill after travelling to Spain, for example.
Are there any other deals out there?
Switching figures collapsed between March and April as banks pulled welcome bonuses
The current account switching landscape has been something of a barren wasteland since mid-March, with the likes of First Direct, HSBC, NatWest all pulling three-figure switch offers, likely contributing to fewer than 30,000 people moving accounts in May and June.
The sole other welcome bonus which currently exists is for TSB’s Classic Plus account, available through cashback site Quidco.
There is a £50 welcome bonus if customers open the account, pay in £500 in three out of the first four calendar months since opening, make two transactions and go paperless.
The account also pays 1.5 per cent interest on balances of up to £1,500 provided customers pay out two direct debits each month, around £22.50 a year in interest on the full balance.
And while there are no switching deals, some accounts do exist which pay interest or rewards in the same way Halifax’s account does. NatWest’s Reward account pays £5 a month back if customers pay in a slightly lower £1,250 a month, pay out two direct debits and log into mobile banking once a month.
The account does come with a £2 monthly fee, cutting the maximum customers can earn to £36 a year.
Who did best in 2019?
With switching data for individual banks now available for all 12 months of last year, here are the banks which gained the most switchers last year:
– Nationwide Building Society – 105,157
– HSBC – 63,635
– Monzo – 63,164
Halifax’s stablemate Lloyds Bank offers its Club Lloyds account, which pays a blended interest rate of around 1.2 per cent on balances of up to £5,000, although this will be cut to around 0.8 per cent from October.
This works out at around £39 a year in interest on the full £5,000 balance.
Like Halifax, it requires £1,500 a month paid in a month or charges a £3 fee and requires two direct debits to be paid out before any interest is earned.
Nationwide’s FlexDirect account pays 2 per cent interest for the first 12 months on balances of up to £1,500 a month, although it used to pay 5 per cent on up to £2,500 until May.
What about packaged bank accounts?
There are some alternatives to Halifax’s Ultimate Reward account if customers are looking to open a packaged bank account, where customers pay a monthly fee in return for benefits.
NatWest’s Reward Silver account is open only to existing customers right now, but if they are looking to trade up for £10 a month they will get European travel insurance up to 22 days per trip, fee-free purchases abroad, mobile phone insurance which covers one repair a year and discounted cinema tickets.
The travel insurance also covers cancellations due to a customer having coronavirus if they weren’t aware of it when they booked their trip, or cancellation due to a change in Foreign Office advice after they have booked, and it covers medical expenses, including cutting short a trip due to coronavirus, if there is no Foreign Office advice against travel in place.
Meanwhile Nationwide’s £13-a-month FlexPlus account is still available to new applicants, even if it is less generous than it was before cuts to its interest and overdraft buffer were made last year.
It provides UK and European breakdown cover, worldwide family mobile phone insurance, fee-free card spending and ATM withdrawals abroad, and worldwide travel insurance.
The insurance will cover medical expenses, cutting short a trip or cancellation of one, provided customers are not travelling against doctor’s or Foreign Office advice.
THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS
Santander’s 123 Lite Account will pay up to 3% cashback on household bills. There is a £1 monthly fee and you must log in to mobile or online banking regularly, deposit £500 per month and hold two direct debits to qualify.
NatWest’s Reward Account pays out £5 a month in rewards if you pay out two direct debits a month of £2 each and log into mobile banking. The account comes with a £2 monthly fee and you must pay in £1,250 a month.
Club Lloyds’s Current Account offers benefits such as cinema tickets, magazine subscriptions and dining cards to current account holders. There is no cost if you pay £1,500 each month, otherwise a £3 fee applies. Must hold two direct debits to earn monthly credit interest.
TSB’s Classic Plus Account pays 1.5 per cent interest on balances of up to £1,500. You must pay out two direct debits, register for internet banking and go paperless.
Nationwide’s FlexDirect account comes with 2% interest on up to £1,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both perks last for a year.
Some links in this article may be affiliate links. If you click on them we may earn a small commission. That helps us fund This Is Money, and keep it free to use. We do not write articles to promote products. We do not allow any commercial relationship to affect our editorial independence.