SWITCHING bank accounts has historically been an easy way to get free cash.
Banks regularly offer hundreds of pounds worth of incentives for new customers to switch to them for a period of time, and there are four deals running right now.
Offers significantly increased switching rates.
However, savvy Brits are being warned to check the terms and conditions before accepting an offer to switch current accounts, as in some cases the requirements for claiming the cash are quite strict.
It is impossible to know whether everyone who applies has received a bonus, as banks do not publish these numbers.
But experts have warned that thousands risk missing out if they do not meet the eligibility criteria.
The big three banks are currently offering up to £200 worth of free cash to new current account customers.
First Direct and Lloyds Bank are offering newcomers £175 to switch, while The Co-operative Bank is offering new customers £150 – a deal that ends today.
However, getting cash isn’t as easy as it used to be. There are often a number of hoops you have to jump through before you can get your cash.
Consumer rights expert Martyn James explained: “It’s so easy to be blindsided by big cash change offers or impressive interest rates.
“But the better the offer, the more catches.
“You don’t tick all the boxes and thousands of people lose their free cash.
“So make sure you check all the T&Cs before switching so you can find the best deal – and don’t get caught out.”
And Alastair Douglas, chief executive of Totally Money, said the eligibility requirements for switch bank deals were “increasingly complicated”.
However, he added: “Loyalty doesn’t pay, but switching can and there are some great deals on the market.
“Just make sure you do your research so you know exactly what it takes to get the full bonus.”
Our experts share the five most common pitfalls that could prevent you from getting free money and how to navigate them.
1. FAILURE TO MEET MINIMUM PAYMENTS
Some accounts require you to pay a minimum amount of money into the account each month, Mr James explained.
For example, newbies who want to take advantage of Lloyds Bank’s £175 offer to switch to a Club Lloyds account have to pay a hefty sum of at least £2,000 a month.
Failure to pay this amount may mean you lose your cash bonus.
However, there are always ways to cheat the system and get around this rule.
For example, if your salary would not cover the minimum wage in amounts, you can temporarily move the equivalent that you have in a separate account or savings account to a new checking account.
Do this once a month and the bank will still count you as eligible for their bonus.
2. YOU DON’T PAY YOUR BILLS
Another ever-frustrating requirement to claim Free Changed Cash is that you generally need to set up at least two direct debits from your new account.
If you don’t, you won’t get free money.
For example, anyone switching to a First Direct account must set up at least two active direct debits within 30 days of switching to qualify for the £175 bonus.
Those who wish to receive an offer from The Co-operative Bank and must also set up two direct debits.
Lloyds Bank requires three.
3. FAILURE TO PAY FEES
Mr James warned potential switches to also always check for hidden account charges.
If you don’t pay the correct amount or follow certain rules for your account, you may have to pay a monthly fee to keep it open – and you won’t get the bonus.
For example, customers who take up Lloyds Bank’s £175 offer to switch to a Club Lloyds account will be charged a £3 monthly fee just to keep the account open unless they pay in £2,000 in a month.
If you get a bonus but then stop paying the minimum and start paying account fees, they could eat into any bonus you got too.
“Look at these comparison tables because some firms charge fees or apply penalties if you don’t meet the minimum requirements,” James said.
“You may even have your account reduced.”
LLOYDS BANK – GET £175
LLOYDS is offering switchers £175 if they switch to one of its three regular accounts: Club Lloyds, Club Lloyds Silver or Club Lloyds Platinum.
Just open an account online, by phone or in branch, then switch to an account from another bank with three direct debits by July 30.
The £175 will then be paid within 10 working days of the start of the transition.
From April 2020 you cannot have a cash bonus from Lloyds, Bank of Scotland or Halifax.
As well as the £175 cash upfront, people switching to Lloyds can get a range of other benefits, including free cinema tickets and a Disney+ subscription.
All three eligible current accounts come with a monthly fee of up to £21, which is waived if you pay £2,000 or more each month.
4. CHECK YOUR HISTORY
Before you commit to switching bank accounts, dig out your old files and triple check that you’ve had a checking account with the same provider before, as you might not be eligible for the deal.
Banks usually offer free money to attract new customers, but old or existing customers usually do not benefit.
For example, First Direct’s current free cash offer is only open to those who haven’t had a financial product with the firm before, or who haven’t had an account with its sister bank HSBC since January 2018.
Andrew Hagger, founder of MoneyComms, explained: “Some banks won’t pay if you’ve switched before.
“And in some cases it can go back five or six years.”
5. USE CASS
In almost every case, you will need to use the Current Account Switching Service (CASS) to qualify for free cash.
Just apply for the new account you want and the new bank will tell your existing one that you’re moving.
However, there are a few things you can do before you switch, including choosing a switch date and transferring all your old bank statements to your new account – so take your time.
When you move, you don’t have to remember to transfer direct debits, because it will be done for you.
Mr Douglas said: “The current account change service works with over 50 banks and building societies and 99% of changes are completed within seven days.”
CO-OPERATIVE BANK – GET £150
THE Co-operative Bank is offering free cash worth up to £150 to new customers.
The offer includes £75 paid upfront to switch, then a further £15 a month for five months for anyone who also opens a Regular Saver account – worth an extra £75.
Anyone who switches will be credited with £75 of free cash within seven days of meeting all the qualifying criteria.
Criteria include opening a Co-operative Bank Standard Current Account or Everyday Extra Account.
You then need to set up two direct debits, deposit a minimum of £1,000 and sign up for online or mobile banking within 30 days of switching.
You must also make a minimum of 10 card transactions within the first 30 days of switching.
If you switched to a cooperative bank from 1 November 2022, you will not be eligible.
You must receive an initial cash payment of £75 to be eligible for a further £75 paid over five months.
You must then open a regular saver account before the last day of the same month in which you receive the £75 cash change incentive.
You also need to deposit £50 into a saver account in the same month you get the £75 switching incentive.
This means that if you receive the £75 transfer bonus in July, you must complete the two actions above by the end of July.
Applications for this offer close on Friday 5th July.
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