We don't need bribery to switch banks
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Your support makes all the difference.The bun fight between UK high-street banks competing for your current account is tasting particularly sweet these days.
The bun fight between UK high-street banks competing for your current account is tasting particularly sweet these days.
A number of banks are now offering cash bribes to customers prepared to switch their current account away from the "big four" - Barclays, Lloyds TSB, HSBC and NatWest.
Alliance & Leicester (A&L) began offering £20 last week to new customers who open one of its two Premier current accounts online. First Direct telephone bank is offering slightly more (£25), but Abbey has the deepest pockets (£40).
You'll have to be fast to catch this last offer, though. Available from Abbey's branches or by telephone, it runs out at the end of play tomorrow.
Next up is the Halifax, which is to launch a current account with a 1 per cent "cashback" debit card next month.
All these providers are trying to dispel the inertia that keeps millions of customers banking with the big four lenders - despite their often pitiful interest rates on credit balances and their hefty overdraft penalties. Indeed, financial incentives shouldn't really be necessary to make people switch away; each of the big banks pays only 0.1 per cent on credit held in their ordinary current accounts.
However, attractive deals on new current accounts usually come with strings attached.
With the A&L Premier Plus current account deal, you must pay in £1,000 a month to earn 5 per cent on your money. Anything above £2,500 will earn only 0.1 per cent - but if you have this much cash, it will probably be better off in a savings account.
The A&L account also offers an introductory 0 per cent overdraft for new customers for the first 12 months, after which the rate reverts to 7.9 per cent.
The Abbey deal has no minimum monthly sum to pay in but "customers need to show they are using this account as their main account by paying in their salary", says a spokeswoman.
You have two options when opening an Abbey account: earn 2.53 per cent on your credit balance but pay 14.7 per cent if you go overdrawn; or go for a lower overdraft rate of 8.7 per cent but earn only 0.1 per cent when in the black.
Switching bank accounts is not the chore it once was; contact your new bank, pass them your details and they will do the rest. But don't forget to give your new account details to those who will be paying money into it - for example, your employer.
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