Best current accounts: Halifax launches £100 switch offer

Current account customers who switch to Halifax using the official service can get a £100 bonus from today, in a move that might help revive competition among banks and building societies.  

Those who earn hundreds of pounds from regularly switching accounts will hope the move from one of Britain’s biggest banks will spur others into action and lead to a resurgence in welcome bonuses.

The move from Halifax comes just days after data from the official switch service found fewer people switched bank accounts between April and June than in March alone, after banks shelved three-figure switching bonuses and closed current accounts to new customers.

And Halifax, part of Britain’s largest current account provider Lloyds Banking Group, announced the £100 switch bonus after the same figures found it had lost more than a net 92,000 accounts between January 2019 and June 2020.

However, it has still been the third most successful bank since the start of 2014, despite leaking switching customers over the last 18 months.

What is the offer?

Halifax is offering £100 to customers who switch to either its Reward or Ultimate Reward current account through the Current Account Switch Service.

The welcome bonus will run between 4 August and 15 September.

Unlike many current account switch deals, there doesn’t appear to be a cut-off point after which you cannot have held a Halifax account in order to benefit from the offer.

The money will be paid in full before the seven-day switchover takes place, Halifax say. The bank last year offered a £135 switch bonus, but that was paid in two parts, with £85 paid upfront.

Both accounts themselves, which must be opened in-branch, online or by phone before the switch from an existing account can take place, do come with catches.

Its Reward account requires customers to pay in £1,500 a month or else it comes with a £3 monthly fee. 

If customers want rewards, they must either spend £500 a month on their debit card or keep £5,000 in their account for a full month.

In return, they can choose either two digital film rentals each month through Japanese streaming service Rakuten TV; three digital magazines a month from Hearst; a Vue cinema ticket every month or £5 a month paid into their account.

If a customer kept £5,000 in their account for a full 12 months and opted for this last option, this would be £60 a year, or roughly 1.2 per cent interest on the balance. 

This is Money ran through the changes made to the account at the start of June in March.

It also comes with an overdraft rate of 39.9 per cent APR, with no fee-free buffer.

Meanwhile, Halifax’s £17-a-month Ultimate Reward account offers those benefits, plus a £50 fee-free overdraft buffer, plus a range of packaged bank account benefits. 

These include AA breakdown cover, home emergency cover, mobile phone insurance and worldwide travel insurance from Axa covering a trip of up to 45 days.

However, the travel insurance will not cover holiday cancellation or early return costs which result from the coronavirus. 

It will cover medical expenses if you fall ill while somewhere the Foreign Office hasn’t advised against visiting, ruling out someone who becomes ill after travelling to Spain, for example.

Are there any other deals out there?

The current account switching landscape has been something of a barren wasteland since mid-March, with the likes of First Direct, HSBC, NatWest all pulling three-figure switch offers, likely contributing to fewer than 30,000 people moving accounts in May and June.

The sole other welcome bonus which currently exists is for TSB’s Classic Plus account, available through cashback site Quidco. 

There is a £50 welcome bonus if customers open the account, pay in £500 in three out of the first four calendar months since opening, make two transactions and go paperless.

The account also pays 1.5 per cent interest on balances of up to £1,500 provided customers pay out two direct debits each month, around £22.50 a year in interest on the full balance.

And while there are no switching deals, some accounts do exist which pay interest or rewards in the same way Halifax’s account does. NatWest’s Reward account pays £5 a month back if customers pay in a slightly lower £1,250 a month, pay out two direct debits and log into mobile banking once a month.

The account does come with a £2 monthly fee, cutting the maximum customers can earn to £36 a year.

Halifax’s stablemate Lloyds Bank offers its Club Lloyds account, which pays a blended interest rate of around 1.2 per cent on balances of up to £5,000, although this will be cut to around 0.8 per cent from October. 

This works out at around £39 a year in interest on the full £5,000 balance.

Like Halifax, it requires £1,500 a month paid in a month or charges a £3 fee and requires two direct debits to be paid out before any interest is earned.

Nationwide’s FlexDirect account pays 2 per cent interest for the first 12 months on balances of up to £1,500 a month, although it used to pay 5 per cent on up to £2,500 until May.

What about packaged bank accounts?

There are some alternatives to Halifax’s Ultimate Reward account if customers are looking to open a packaged bank account, where customers pay a monthly fee in return for benefits.

NatWest’s Reward Silver account is open only to existing customers right now, but if they are looking to trade up for £10 a month they will get European travel insurance up to 22 days per trip, fee-free purchases abroad, mobile phone insurance which covers one repair a year and discounted cinema tickets.

The travel insurance also covers cancellations due to a customer having coronavirus if they weren’t aware of it when they booked their trip, or cancellation due to a change in Foreign Office advice after they have booked, and it covers medical expenses, including cutting short a trip due to coronavirus, if there is no Foreign Office advice against travel in place.

Meanwhile Nationwide’s £13-a-month FlexPlus account is still available to new applicants, even if it is less generous than it was before cuts to its interest and overdraft buffer were made last year.

It provides UK and European breakdown cover, worldwide family mobile phone insurance, fee-free card spending and ATM withdrawals abroad, and worldwide travel insurance.

The insurance will cover medical expenses, cutting short a trip or cancellation of one, provided customers are not travelling against doctor’s or Foreign Office advice.