15th February 2016
The battle between the UK’s current account providers is showing now signs of easing and consumers in ever-greater numbers are taking advantage of the new deals on offer.
Comparison website MoneySuperMarket.com has seen a massive surge in demand, with a 104% increase in the number of current accounts being opened in 2015, compared to the previous year.
Providers have been upping their cash switching incentives in recent months in order to attract new customers, with First Direct’s 1st Account offering £150 to anyone applying directly through MoneySuperMarket.
In addition, Clydesdale Bank is offering £150 to those who switch to its Current Account Direct. However, with such fierce competition, it seems cash incentives just for switching may no longer be enough to tempt new customers.
A number of new deals have already launched in 2016 offering ongoing cashback.
M&S Bank laid down the gauntlet by promising up to £220 store credit for those who switch their current account and maintain the minimum requirements.
Customers will receive a £100 gift card for switching, which will then be topped up by £10 each month for the first year, provided the account is funded with £1,000 a month and two direct debits are set up.
Meanwhile, the Co-op Bank’s Standard Current Account offers the potential of £166 cash in the first year – £100 on switching directly through MoneySuperMarket and £66 on top of this if customers adhere to simple banking practices, such as setting up at least four monthly direct debits and logging into online banking or their mobile app once a month.
Maximise savings with in-credit interest
Current account holders can also earn extra simply by keeping a certain amount of money in their account. Nationwide offers five per cent AER on balances up to £2,500, as well as a 0% EAR on overdrafts for the first year, as long as £1,000 is paid into the FlexDirect account monthly.
For those with higher balances, Santander’s 123 account pays 3% AER on balances between £3,000 and £20,000, provided that it is funded with £500 each month.
It also pays up to 3% cashback on a variety of essential bills, such as utility, council tax and mobile and home phone bills.
However, the account now also comes with a monthly fee of £5, so it’s important to work out whether you’ll still be making a profit after this.
Kevin Mountford, banking expert at MoneySuperMarket, said: “There has been a lot of movement and change in the current account space since the start of the year and we’re now seeing some great offers on the market.
“Consumers should switch and take the incentives being offered if they aren’t satisfied with their current deal, but also thoroughly examine the whole package before making any decisions.
“It’s important to consider how the account will be used on a day-to-day basis and review any fees and charges to avoid paying over the odds, especially if the account goes overdrawn.”