Current account deals that make you think about switching

Banks need to be on their toes all the time and step up their game if they want its current roster of accounts to stay the same. Industry figures show that 1.1 million people have switched bank providers in 2014 and more than 300,000 of those moved to just two – Halifax and Santander.

Current-account switching has been made easier in the past year allowing Santander to gain 170,551 new customers, allowing them to take a slight lead over Halifax who gained 156, 639 new customers. A majority of other banks lost customers with Barclays being the worst hit, losing more than 83,000 accounts.

Just what is it with Santander and Halifax one might wonder?

We highlight two of their interesting current account features – cashback and higher interest rates.

Spanish-owned Santander’s lucrative offer is the high interest rate it pays on credit balances – up to 3% – along with cashback rewards when you use your current account to pay bills. It’s a bit hard to take note of rewards though as Santander tiers its interest rates (for example balances of £1,000 or over earn 1% interest and increases as balance increases) and cashback rewards (percentage cashbacks depend on the type of bills you pay) vary but they are the only bank provider that gives this much to customers, just by maintaining their accounts with them.

Halifax has a simpler reward structure, paying £5 a month on balances in credit but needing to pay at least £750 a month, stay in credit and pay at least two different direct debits. It also pays you to switch, giving you £125 credit.

And while the features highlighted above seem like enough to convince 300,000 people to make the switch, Santander makes it more lucrative by letting you earn more interest for up to £20,000. This has been identified as the primary reason why people have opened up accounts with them to use primarily as savings. Most of them still keep their current accounts running with their original provider. Imagine, you stand to earn £480 a year if you keep £20,000 in your Santander account (that’s less taxes already)! Halifax meanwhile is the best bet for those whose balances are smaller, given they even pay you switch.

Consultant Andrew Hagger analyzed these features and advises that if you are interested more on the earning interest of your credit balance, you’d need to have £3,500 in your current accounts every month to make the most of what Santander offers. But if you have balance less than that, Halifax pays more. At the amount, both of them pays you £60 on interest. The tipping scale points to Santander once more if you factor in cashback incentives. It might be hard to monitor and compare features at first, but if you are one who wants to earn the most bang for your back, analyses like these help you decide which provider to team up with.

As we have said, switching has been easier since September 2013. You can close and open a new account within seven working days and have the staff set up everything for you – bills payments for example – without you lifting a finger to notify your old bank.

The only drawback seen in switching accounts is the loss of access to financial history. Banks charge for each statement your request so it’s better to download banking statements before making the switch.

So will you switch?

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