Your current account, like the vast majority of people in the UK, is probably 100% functional: it’s essential for money management, but offers little to no lifestyle benefit.
However, as the government, regulators and ‘consumer champions’ have increased their calls for consumers to switch accounts, banks have responded with innovative rewards and features that encourage signups and foster brand loyalty. Enter the reward current account.
Rewards available from UK current accounts vary from bank to bank, and they change regularly. However, typical free rewards include some of the following:
Cashback on particular direct debits paid from your account – for example council tax, energy, telephone, water
Cashback when using your debit card with selected retailers
Fee-free foreign cash withdrawals
Interest on in-credit account balances, access to preferential savings account rates or fixed monthly reward payments
Switching incentives – usually cash or a gift voucher – to encourage you to move to them
If you’re in a position to opt for a packaged current account, the available rewards can be even more valuable and can save you a considerable amount of money in the long run as they include such features as:
Mobile phone insurance
Motor breakdown cover
Store discount vouchers
These accounts aren’t suitable for everyone, though. You need to have a high degree of certainty that the value you will obtain from your account will outweigh any direct cost associated with it.
Most high street banks and a few other financial institutions offer some kind of reward account, including:
Royal Bank of Scotland
Although there’s a great deal of reward account choice, products are not universally suitable, and getting the right account for you requires consideration.
Many accounts have requirements you must meet to qualify for the rewards they offer, such as:
A minimum amount that you must pay into your account every month
A minimum number of monthly direct debits
A minimum number of debit card transactions
The reason that banks impose these requirements is that they want to ensure your primary bank account is with them. In most instances it will be, so it should be fairly straightforward to qualify for the rewards. However, if you choose – for example – not to pay bills by direct debit you may find you don’t qualify for account rewards.
Assuming you’ve found reward accounts that you qualify for, the simplest way to compare them is to total up the monetary value of the rewards you’ll receive, then subtract any costs associated with the account.
Money isn’t always everything, though, and other considerations may be of greater importance to you. For instance, if you like to visit a branch to do your banking face-to-face, make sure that your preferred bank has a convenient local branch.
Switching your bank account in the UK has been very easy since the launch of the seven-day current account switch guarantee, and usually your new bank will ask for your existing account details during the application process to ensure changing your bank is as pain-free as possible.