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Best current accounts: Top bank accounts for switching with rewards

Figures from the Current Account Switch Service have found more than 7million people have now switched their bank account since 2013.

But if that sounds like a cause for celebration, it’s just 1million more people than the number who switched energy supplier in 2020 alone. 

The people who regularly switch bank accounts are a rarity, and are usually the ones happy to spend a few hours doing their research in return for a cash switching bonus or other perks. 

But switching should now be easier than ever, with CASS pledging to transfer your account and any direct debits over in seven days.

Find a more rewarding deal: Some accounts promise cashback, interest and freebies

While current account perks are not as generous as they used to be before the pandemic, banks have started competing for customers again in recent months, with some even bringing back switching bonuses. 

Some banks are beginning to increase their interest rates too, albeit from a very low base. 

If you’re unhappy with your current bank or spot a better deal elsewhere, it may well be worth considering a switch. You can find our picks of the best accounts below. 

Account Perks Conditions Overdraft 
First Direct 1st Account   £250 interest-free overdraft
Earn 1 per cent via Regular Saver Account
NA Above £250 it is charged at  39.9 per cent
Nationwide FlexDirect £100 switching incentive. If you are a Nationwide member, you’ll get £125 for switching.
2 per cent interest up to £1,500 and fee-free overdraft, both for the first year only. After the first 12 months, it’s 0.25 per cent.
Interest-free arranged overdraft for 12 months
Pay in £1,000 a month. After the first 12 months it is 39.9 per cent
Halifax Reward
The choice of £5 a month paid into your account, two film rentals or three magazine rentals, or a free cinema ticket each month. £3 monthly fee or pay in £1,500 a month. Spend £500 on your debit card each month or maintain a balance of £5,000. 39.9 per cent 
HSBC Advance  £150 switching incentive ONLY available via Moneysupermarket or MoneySavingExpert.
Additional £10 will be donated to housing and homelessness charity, Shelter.
Earn up to 1 per cent interest via regular saver account.
£25 interest free overdraft. 
Switch using CASS with two direct debits or standing orders. Must not have been a First Direct or HSBC customer since 2018. After first £25 its 39.9 per cent 
Club Lloyds  Pays 0.6 per cent on up to £4,000, and 1.5 per cent on £4,000 – £5,000.
Choose a reward each year from 6 cinema tickets, an annual magazine subscription, 12 digital movie rentals.
£50 interest free overdraft
£3 monthly fee or deposit £1,500 a month, pay out two direct debits. After first £50 its 27.5 per cent.
Santander 123
£140 cashback incentive
Santander will pay up to 3 per cent cashback on bills. Capped at £5 each month.
Pays 0.3 per cent on balances up to £20,000.
£2 a month fee. You must pay in £500 a month and maintain two active direct debits. 39.94 per cent.
NatWest Reward  £150 switching incentive
£5 a month back in rewards and 1 per cent back from certain partner retailers.
£2 monthly fee. Must set up two direct debits a month for £4 bonus, and then log into mobile banking once a month for £1 bonus.  39.49 per cent 
Starling Bank current account  0.05 per cent interest on balances. Fee-free spending and ATM withdrawals abroad. Online and smartphone-only bank. 15, 25 or 35 per cent depending on credit score.
Virgin Money  A £150 Virgin Experience Days gift card to switch and a free £50 donation to a charity registered with Virgin Money Giving. Account pays 2.02 per cent monthly interest on up to £1,000 and comes with a linked easy-access account paying 0.35 per cent. Apply online, switch through CASS with two direct debits and pay in £1,000 to a linked easy-access account. 19.9, 29.9 or 39.9 per cent based on credit score.
Barclays Bank account  Access to Blue Rewards membership with cashback offers including £7 a month, £5 a month for having a Barclays mortgage and 3% back on Barclays home insurance policy.  £4 monthly fee and you’ll need to pay at least £800 into the account each month.  35 per cent 
Triodos Bank  Low overdraft rate of 18 per cent.
Promises only to lend on projects that make a ‘positive impact’ for people and the planet.
£3 monthly fee. 18 per cent.

1. Best account for in-credit interest: Nationwide 

Current account in-credit interest is not what it used to be. 

Last April Nationwide Building Society’s FlexDirect account, which had helped Britain’s biggest mutual snap up almost 600,000 net switchers since 2013, saw its rate fall from 5 per cent to 2 per cent.

But at a time of low rates, this is still the best interest-paying account out there. The rate is paid on balances of up to £1,500, for the first year, and isn’t bad considering top easy-access deals pay just 0.65 per cent.

Someone retaining a minimum of £1,500 in their account would earn £22.66 in interest over the course of a year.

Although Virgin Money’s account pays 2.02 per cent interest, this is only on balances up to £1,000 and therefore the maximum interest achievable falls just shy of Nationwide’s account.  

For the Nationwide account, holders must pay in a minimum monthly income of £1,000. 

Interest: Nationwide pays 2% on balances of up to £1,500 for your first year and is currently offering cash bribes of up to £125 to switchers

Interest: Nationwide pays 2% on balances of up to £1,500 for your first year and is currently offering cash bribes of up to £125 to switchers

On the last day of every month Nationwide will calculate the interest earned each day and then pay this interest on the first day of the next month. 

Holders are also eligible for a 0 per cent overdraft for the first 12 months, but after that they pay a whopping 39.9 per cent. 

Watch out  

If your income drops and you can’t pay in £1,000, you won’t receive any interest that month.

The 2 per cent interest deal ends after a year, when it drops to just 0.25 per cent. So it may be worth looking elsewhere after the 12 months for a better return on your money.

You get an interest-free arranged overdraft for that 12 month period, but after that overdraft fees are hefty.

Recent changes to its overdrafts mean customers will now pay a flat rate of 39.9 per cent interest when overdrawn, this will be costly for those who regularly stray into the red. 

Our verdict

Accounts that are good for both in-credit and overdrawn customers are few and far between, so this could be a good bet for those who have smaller balances – but can afford to pay in £1,000 each month. 

2. Best account for cash: NatWest

Three-figure switching bonuses disappeared for much of 2020, but there are now seven current accounts offering £100-plus for switching.

What about overdraft rates? 

Previously, This is Money offered a guide to the best bank accounts for overdraft borrowers. 

Unfortunately, that guide is somewhat moot after almost all of Britain’s biggest banks hiked the cost of borrowing to nearly 40 per cent APR, more than double the cost of the average credit card. 

According to the latest figures from the Bank of England, average overdraft rates stood at 20 per cent in December.

This was in response to a crackdown on the cost of unarranged borrowing and the transparency of overdraft rates, which were often priced using daily fees which quickly added up.

Sadly, this means there isn’t a great deal of savings to be made, with almost all banks charging upwards of 35 per cent and HSBC, Lloyds, NatWest, Nationwide Building Society and Santander all charging 39.9 per cent. 

Instead, the best bet is to avoid being charged these fees in the first place, by using a fee-free buffer if it’s available. The best buffer is offered by HSBC offshoot First Direct, and offers £250 fee-free.

NatWest is offering £100 to new and existing customers who switch with an additional £50 injection for those who stay for a further nine months.

Both new and existing customers can apply to switch to a number of its accounts – the Select and Reward account being its most popular.

Watch out

Switches must be made using the Current Account Switch Service (CASS) by 2 December.

You will also need to pay in £1,500 into the account and log into mobile banking through the NatWest mobile app to qualify for the initial £100.

A further £50 is then on offer if 10 transactions either in or out of the account are made for nine consecutive months between 1 January and 30 September.

The Select account has no monthly fee, although for anyone intent on using their account, the Reward account will likely prove a more lucrative option.

Although the Reward account comes with a £2 monthly fee, you should still make a net gain of £3 each month.

This is because it pays £4 each month for setting up two monthly direct debits and an additional £1 each month for logging onto online banking.

NatWest Reward switchers will also gain access to a linked savings account paying up to 3 per cent interest on balances of £1,000, although you can only put in £50 each month.

Our verdict

Although the additional £50 cash injection comes after nine months, this cash switching bonus is still the best around at present.

But with the offer ending on 2 December, switchers can’t afford to wait long in order to take advantage. 

Lloyds Bank: offers the best current account for interest on large balances

Lloyds Bank: offers the best current account for interest on large balances

3. Best account for interest on a large balance: Lloyds

With multiple cuts to Santander’s 123 account over the past two years, and the account paying just 0.3 per cent on up to £20,000 since April 2021, Lloyds Bank’s Club Lloyds account is now probably a better offer when it comes to interest on big balances. 

However, it should be noted that the 123 account still offers up to 3 per cent cashback.

Club Lloyds pays 0.6 per cent on interest on balances of up to £3,999, while those with sums of between £4,000 and £5,000 will earn 1.5 per cent on that balance. 

This works out at around £39 interest if customers kept in the full £5,000 for a year, an interest rate of around 0.8 per cent. 

Overdrafts are charged at 29.9 per cent after a £50 interest-free buffer. There is no monthly fee if you pay in £1,500 a month, otherwise it charges £3.

Our verdict

Cuts to current account interest mean the blended rate of around 0.8 per cent you can get from Club Lloyds on £5,000 is the best rate you can get on balances above £1,500, while the £100 switching bonus is the joint-best around.

The rate itself is slightly better than the best easy-access rate around at the moment, meaning you’d only earn a little less if you wanted to stash it elsewhere. 

But if you regularly have a balance of more than £5,000, that might be a better option. 

4. Best account for cashback: Barclays

Barclays has proved to be the least popular bank, according to the current account switching figures, having suffered a customer net exodus of over 455,000 since 2013.

But for those looking for a bank with a decent cashback offering Barclays may be your best bet.

Although regular Barclays current account customers don’t have any obvious automatic perks, they are eligible to sign up to Barclays Blue Rewards.

This allows you to get up to £7 a month for using your account, with Barclays giving you £3.50 for every two direct debits you pay each month.

Also, the more products you hold with Barclays the more cashback you can earn.

For example, you can get £5 a month if you have a residential mortgage with Barclays.

Barclays bank account customers get access to Barclays Blue Rewards which offers an array of cashback options.

Barclays bank account customers get access to Barclays Blue Rewards which offers an array of cashback options.

You can receive £1.50 a month if you take out life insurance with the bank, or £5 a month for life insurance with critical illness cover.

Home insurance taken out through Barclays also enables customers to pocket 3 per cent cashback from their policy premium.

Other decent current account cashback deals to consider are offered by Santander and TSB.

Santander’s 1|2|3 Lite Current Account, which has no account fee, offers up to 3 per cent cashback on selected household bills, capped at £5 in each cashback tier each month.

It offers 3 per cent cashback on water bills, 2 per cent cashback on gas and electricity, home insurance and life protection, and 1 per cent on mobile, broadband and TV packages.

TSB’s current account, which likewise has no monthly charge, offers £5 cashback to those who are able to make at least 30 debit card payments each month using its card.

Watch out

To be eligible you will need to have either a standard Barclays bank account or a premier account.

Those with the basic account, BarclaysPlus, Wealth or Business, young person’s account, student and graduate account or foreign currency account, won’t be eligible for Barclays Blue Rewards.

The rewards membership comes with a hefty £4 monthly fee and you’ll also need to make sure at least £800 is paid into the account each month.

Both the home insurance cashback and life insurance cashback are not available for wealth management customers.

With the life insurance cashback, you’ll only receive cash rewards for the first 12 months of your policy.

Our verdict

Although the £4 monthly fee might put some people off, if you have any other Barclays products this could be a worthwhile account to have.

For example, were you to have a Barclays mortgage, then Barclays rewards could earn you £7 a month even after the monthly charge has been paid.

Winner of ‘best British bank’ at the British Bank Awards four years in a row and gaining the highest number of net accounts through the switching service since the start of 2020, digital challenger bank Starling is increasingly a force to be reckoned with. 

Originally a smartphone-only bank with an offering aimed largely at holidaymakers, the challenger, launched in 2016, has increasingly grown into a legitimate, even potentially profitable, challenger to Britain’s biggest banks.

Starling: The multiple award-winning smartphone challenger bank

Starling: The multiple award-winning smartphone challenger bank

Its current account can be downloaded through a smartphone app and can now also be managed online, and pays 0.05 per cent interest on up to £85,000. 

It offers instant spending notifications, compartmentalises spending into categories and lets accountholders create dedicated ‘spaces’ for their savings. 

Plus, it allows customers to use their card overseas with no fees and make unlimited ATM withdrawals, again, without fees.

Watch out

Starling doesn’t have any branches, which might cause an issue for some customers who want face-to-face banking, but customers can pay in cheques at 11,500 Post Office branches or using the app.

Like other banks, it also charges a potentially steep overdraft rate of up to 35 per cent on overdrafts, depending on customers’ credit scores, although this can be as low as 15 per cent.

Our verdict

Starling has gained close to 74,000 switchers during the pandemic without offering customers any sweeteners suggesting it must be doing something right, and the bank’s interface and the way in which it categorises transactions has been praised by customers and awards judges alike as intuitive and easy to use.

Some Britons may not be ready to fully embrace digital banking, but with fee-free overseas spending and ATM withdrawals, perhaps they should consider trying it for their holiday spending, if and when holidays are once again allowed, and go from there.

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