Today I’m really happy to introduce a brilliant guest post from the UK money blog My Side Hustle. This post talks about something I’ve always wanted to do but not been brave enough to try – switching your bank account to make money from sign-up bonuses. There are loads of great tips in this post so I hope you enjoy it!
Did you know you can make hundreds of pounds just by switching your current account? You may think it is too complicated or time consuming, but let me assure you it is incredibly simple and one of the easiest ways to make money.
Over the last couple of years I’ve made over £500 by doing so, and you don’t even have to lose your main account you’ve held for years or even decades.
Why are banks giving away free money?
You may think this is too good to be true, there must be a catch. Why would a bank or building society pay money just for switching your account to them?
It’s the main reason why a company does anything, they want to make money from you. By having you as a customer they can then sell more products to you. They may advertise an account upgrade where you pay a monthly fee for additional ‘perks’ (such as travel insurance or mobile phone cover).
They can also sell you a loan or credit card, making money of the interest you pay. They know many people tend to take out credit with their current account provider.
The reason banks are happy to give you free £100 cash or more is because they can then make even more money from you as a customer.
BUT…you can play the banks at their own game, switch your account, get paid for it but don’t use their extra services if you don’t need them. There is no limit on how many times you can switch your account.
But I don’t want to lose the current account I’ve held for years
The beauty of it is you don’t have to lose your main account. I’ve had my main current account for a decade, despite having switched current accounts numerous times.
Simple, open a dummy account just for switching.
I logged into my online banking account, clicked the option to open a current account, and because the bank already had all my details they opened a second account ready to use within a matter of minutes!
How do I switch?
- When applying for your new bank account ask you new bank to switch your old current account. The application form usually asks to provide details for the account you wish to switch.
- Before you proceed with the switch, you are required to agree to the ‘Current Account Switch Agreement’ and the ‘Current Account Closure Instruction’, provided by your new bank or building society.
- Choose a switch date. You can choose the date your current account will switch, the process can take up to seven working days. You can continue to use your old account up until this date.
All direct debits, standing orders and salary will be automatically switched by your new bank or building society.
How to meet the bank’s criteria
Some banks or building societies have criteria you are required to meet, such as a minimum salary to be paid in monthly or a minimum number of standing orders or direct debits.
For example, HSBC are offering a total of £200 free cash, but you need to receive a salary of £1,750 each month and have two standing orders or direct debits. What you do you if you don’t earn enough or have enough standing orders/direct debts?
- The £1,750 does not need to be from your employer. You can just transfer the money from another of your accounts and transfer it back out the same day. Even better is if you automate it with a standing order to your HSBC account and set up another standing order back out the same day.
- You can set up standing orders or direct debits to another one of your own accounts such as savings, or you could even choose to give to charity.
Current account deals
So what deals are on offer?
Be Clever With Your Cash has an up to date list available, it not only includes accounts that have a cash back offers but also accounts with high interest rates if you are looking for somewhere to put your savings.
Will it affect my credit score?
Anytime a credit search is carried out on you, impacts negatively on your credit score. Whenever you apply for a new current account a credit search is carried out.
From my own experience and research, opening one additional account has very little impact on your credit score. The more you open in a short period of time the larger an impact it can have. If you are concerned about your credit score you can check it for free on websites such as Clear Score.
To be on the safe side, if you know you are looking to take out a mortgage, loan or credit card in the next couple of months, it may be wise to hold off opening a new account until after.
I’ve opened two or three accounts within a couple of months of each other and had no issues.
What if something goes wrong?
All banks and building societies have signed up to the Current Account Switch Guarantee so are required to switch your account within 7 working days, if there are any missed payments due to the switch you will be refunded.
Is it worth it?
Yes, most definitely.
With the technology today, you can open a new account within minutes.
There is rarely an advantage to being loyal to your bank, just like you do not get anything out of being loyal to your insurance or utility provider. Many people switch their insurance or utility provider regularly if they get a better deal elsewhere, so why not switch your current account?