Switch incentive accounts offer a cash award for switching to them.
What are switch incentives?
As a nation, we are very loyal. Not to everyone, or everything, but to our banks. They rarely all perform well in satisfaction surveys, we may moan about them to anyone who'll listen, but we stick with them - we're not quitters!
Even after regulators forced the banking industry to make it easier to switch, with the seven-day switch, the number of people who move their bank account has hardly changed.
But, of course, banks want new customers, especially the good ones - why try so hard if no-one will use you? So, if poor customer service and a simpler/quicker way of switching won't getting us moving, what will? Well, some have decided that money talks!
How about paying customers to move their account with a switching incentive?
What switching incentives are available?
Different banks offer different amounts to switch to them, but they tend to be around £100. Sometimes they are paid in cash, sometimes they are vouchers, but all of them give you the opportunity to get something for nothing.
Can I get multiple switch incentives?
In theory, you can switch as often as you need to, but most banks will have rules capping customers to one switch incentive each. That means, if you take your business elsewhere and you don't like it, you can switch back, but you won't get anything for doing so.
Many banks will also require you to maintain your main bank account with them for a specified period to get a switching incentive (or not have to pay it back).
What else should I look for when comparing bank accounts?
Switch incentives can be very distracting. You want to focus on the other features and benefits of an account, but the carrot obscures you from seeing the sticks.
So what else should you check, before you apply? Well, if you have the time, you should check every detail of the terms and conditions covering every eventuality. However, back in the real world, there are a few things you should pay very careful attention to. These include:
Whether or not you currently use an overdraft, you should pay due care to how it would be charged. Different accounts charge different fees, in different ways. Depending on how long you use your overdraft for, they can be a very expensive form of credit, so try to minimise what you'll pay, before you ever need to use it.
One of the downsides to 'free banking' is that very few accounts now offer interest on your money. However, some do, and if you normally maintain an in-credit balance, you should try to maximise this.
Minimum monthly funding
Although most UK current accounts are free (if you stay in credit), many stipulate that you must pay in a specified amount every month. If you fail to meet this requirement, some banks will charge a monthly fee, which can quickly erode your balance.