SWITCHING BANK REGISTRATION has traditionally been an easy way to earn free money.
Banks regularly offer incentives worth hundreds of pounds to new customers who switch to them for a set period. There are currently four deals active.
The offers have led to a huge increase in the number of people switching.
However, savvy Brits are warned to check the terms and conditions before taking up any offer to switch their current account, as in some cases the requirements to claim the money are quite strict.
It is impossible to know whether everyone who applies will actually receive the bonus, as banks do not publish these figures.
However, experts warn that thousands of people are at risk of missing out if they do not meet the eligibility criteria.
Currently, three major banks are offering new current account customers up to £200 worth of free money.
First Direct and Lloyds Bank are offering new customers £175 to switch, while The Co-operative Bank is offering new customers £150 – an offer which ends today.
However, it is not as easy to get the money as it used to be. There are often a number of hurdles that you have to overcome before you can claim the money.
Consumer rights expert Martyn James explains: “It’s so easy to be blinded by big money switching offers or impressive interest rates.
“But the better the supply, the more catches there are.
If you don’t meet all the requirements, thousands of people will miss out on the free money.
“Therefore, check all the general terms and conditions before switching, so that you can find the best deal and avoid any surprises.”
And Alastair Douglas, CEO of Totally Money, said the eligibility requirements for bank switching deals were becoming “increasingly complex”.
However, he added: “Loyalty doesn’t pay, but switching does and there are some great offers on the market.
“Make sure you do your research so you know exactly what you need to do to claim the full bonus.”
Our experts share the five most common loopholes that can prevent you from getting free money, and explain how to deal with them.
1. FAILURE TO MEET MINIMUM PAYMENTS
Some accounts require you to deposit a minimum amount into the account each month, Mr. James explained.
For example, newcomers who want to take advantage of Lloyds Bank’s offer to deposit £175 into a Club Lloyds account will need to deposit a hefty sum of at least £2,000 per month.
If you do not pay this amount, you may lose the cash bonus.
However, there are always ways to cheat the system and get around this rule.
For example, if your salary is not sufficient to pay the minimum wage, you can temporarily transfer the equivalent that you have in a separate account or savings account to the new checking account.
Do this once a month and, according to the bank, you will continue to be entitled to the bonus.
2. NOT PAYING YOUR BILLS
Another increasingly frustrating requirement to claim free switching money is that you usually have to set up at least two direct debits from your new account.
If you don’t do this, you won’t receive the free money.
For example, if you switch to a First Direct account, you must set up at least two active Direct Debits within 30 days of switching to qualify for the £175 bonus.
If you want to take advantage of The Co-operative Bank’s offer, you will also need to set up two direct debits.
Lloyds Bank is asking for three.
3. NOT COVERING COSTS
Mr James warns potential switchers to always check for hidden account fees.
If you do not pay the correct amount or follow certain rules for your account, you may be required to pay a monthly fee to keep your account open. In that case, you will not receive the bonus.
For example, customers who take up Lloyds Bank’s offer to transfer £175 to a Club Lloyds account will pay a monthly fee of £3 to keep the account open if they don’t pay £2,000 in a month.
If you do receive the bonus but then stop paying the minimum amount and start paying account fees, these can also eat into any bonus you may have.
“Take a look at those comparison tables because some companies charge fees or impose fines if you don’t meet the minimum requirements,” Mr James said.
“Your account may even be downgraded.”
LLOYDS BANK – PACK £175
LLOYDS is offering switchers £175 when they switch to one of three current accounts: Club Lloyds, Club Lloyds Silver or Club Lloyds Platinum.
All you need to do is open an account online, by phone or at a branch and then switch to an account with another bank before 30 July, including three direct debits.
The £175 will then be paid out within 10 working days of the switch start date.
Since April 2020, you may no longer have received a switching bonus from Lloyds, Bank of Scotland or Halifax.
In addition to the £175 upfront cash payment, people switching to Lloyds can take advantage of a host of additional benefits, including free cinema tickets and a Disney+ subscription.
All three eligible current accounts have a monthly fee of up to £21. This fee is waived if you deposit £2,000 or more each month.
4. CHECK YOUR HISTORY
Before you decide to switch bank accounts, it is wise to take out your old files and check whether you have had a current account with the same provider before. Otherwise, you may not qualify for the deal.
Banks usually offer free money to attract new customers, but existing customers usually cannot take advantage of this.
For example, First Direct’s free cash offer only applies to people who have never had a financial product with the company before or who have not had an account with sister bank HSBC since January 2018.
Andrew Hagger, founder of MoneyComms, explains: “Some banks won’t pay out if you’ve switched early.
“And in some cases this can even go back to the last five or six years.”
5. USE THE CASS
To qualify for free money, in almost all cases you must use the Current Account Switching Service (CASS).
All you need to do is apply for a new account. The new bank will inform your current bank that you are moving.
There are a few things you can do before you switch, such as choosing a switch date and transferring old bank statements to your new account, so take your time.
When you move, you don’t have to think about moving your direct debits, this will be done for you.
Mr Douglas said: “The Current Account Switch Service works with over 50 banks and mortgage lenders, and 99% of switches are completed within seven days.”
THE CO-OPERATIVE BANK – PACK £150
THE Co-operative Bank is offering new customers free cash worth up to £150.
The offer includes a £75 upfront payment to switch, followed by a further £15 per month for five months for anyone who also opens a Regular Saver account – worth a further £75.
Anyone who makes the switch will receive the £75 free cash within seven days of meeting all qualifying criteria.
The criteria include opening a Co-operative Bank Standard Current Account or an Everyday Extra account.
Within 30 days of switching, you’ll need to set up two direct debits, deposit a minimum of £1,000 and sign up for online or mobile banking.
In addition, you must make at least 10 card transactions in the first 30 days after switching.
You are not eligible if you switched to the Coöperatieve Bank after November 1, 2022.
To qualify for the extra £75 paid over five months, you must have received the first cash advance payment of £75.
You must then open a savings account before the last day of the same month in which you receive the £75 cash switching discount.
You must also deposit £50 into the savings account in the same month that you receive the £75 switching discount.
This means that if you receive the £75 switching bonus in July, you must complete the above two actions by the end of July.
Registration for this offer closes on Friday, July 5th.
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