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Table of Contents
6 ways to make thousands from your current account
Fancy cashing in on more than £2,000 from all the offers and interest on current accounts?
People are more likely to get divorced than ditch their current account, so banks are willing to pay you to switch.
Often, you can make a fistful of fivers just by opening an extra account, without even having to change banks.
The big banks rely on loyalty and lethargy to make customers stick around. But if you are willing to fill in a few forms, set up a few direct debits and have a reasonable credit record, you can cash in on free money.
Now, I’ve written about earning interest and cashback on current accounts in the past. But some of the offers and interest rates have changed.
For example, last week Lloyds Bank and Bank of Scotland announced they would be cutting interest on the Club Lloyds and Vantage accounts by a quarter. From July, both accounts are reducing the interest paid on up to £5,000 from 2% to 1.5%.
But if you’re fed up, don’t suffer from high charges, rubbish service or slashed benefits when you can flounce elsewhere.
Here’s a round up of the latest deals and hacks to make money from your current account:
- Get paid to switch
- Make money from your bills
- Earn interest on your balance
- Add extra money from other products
- Get a bonus for referring your friends
- Bag a freebie for being a student
Don’t get stuck with the same boring bank!
Get paid to switch
Banks used to pay chunky sums if you were willing to switch to a new current account and close your old one, rather than just opening an extra account. Switching bonuses are rarer than they used to be, but you can still pocket a pretty penny.
Switch to a Halifax Rewards current account, and you can nab £75 when the switch completes, without making any minimum payment. Halifax will also give you another £3 every month, if you pay in at least £750 a month, pay out at least two direct debits and don’t go into an overdraft.
I tend to prefer cold hard cash to vouchers. However, if you’re keen on Marks & Spencer, you can get a £125 M&S gift card for switching to M&S Bank. Plus, pay in at least £1,000 a month and pay out at least two direct debits, and you’ll get an extra £5 a month added to the gift card for the first year. That’s £185 in total!
But you can do even better if you sneakily open an M&S credit card first. Switch you current account to M&S Bank as an M&S credit card holder, and you’ll get a smaller £100 gift card, but topped up with £10 a month for the first year. So £200 overall. (Info here)
Until recently, First Direct was willing to pay £100 or even £125 if you switched to its current account and had never banked with First Direct before. But from 24 April, First Direct now offers a choice of tech, travel or self-development freebies, such as a £150 Expedia voucher, an Amazon Echo Spot, a Fitbit Charge 2 Special Editon, Bose wireless headphones or an online course from Blue Mountain. Check out the swag on offer here. Just make sure you pay in £1,000 within the first 3 months to qualify.
The good news is the Current Account Switch Service used by most banks makes switching easy and stress free. You open the new account, pick a date to switch accounts at least seven working days ahead and your new bank should take care of everything else. Your balance and payments in and out like salary, standing orders and direct debits will all be transferred across and your old account will be closed. If you do get hit with charges you shouldn’t, they’ll be refunded.
How much can you make?
Switch and stick for a year, and you could make £481 in total across First Direct (£150 Expedia voucher), Halifax (£111) and M&S Bank (£220).
What to watch out for
- You only get switching bonuses if you do a proper switch and close your old account, so be prepared to wave goodbye to your previous bank.
- Check the small print. You may need to pay in a certain amount each month, or set up a specific number of direct debits, to qualify.
- Watch out for fees. With First Direct, make sure you pay in £1,000 a month, leave a £1,000 balance in your account or open another account like a savings acount, to avoid a £10-a-month fee after the first six months.
2. Make money from your bills
Some current accounts pay cashback on your household bills. Let’s just think about that – free money just for paying your bills, plus you don’t even have to close your old account!
So the NatWest Rewards accounts pay 2% back on seven different direct debits: Council Tax, water, gas, electricity, mobile, landline TV package and broadband. You can also earn at least 1% cashback on selected retailers when paying with a NatWest debit card. but have to pay £2 a month for the cheapest NatWest Rewards current account. NatWest reckons people should earn £83 a year based on average bills, which more than covers the £24 a year fee.
Meanwhile the Santander 123 account pays from 1% to 3% cashback on assorted bills and Santander products, plus up to 15% cashback on various retailers. Plus, if you have some savings, you can earn 1.5% interest on up to £20,000. The sting in the tail is the £5 a month fee.
However, if you’re not bothered about earning interest, you can cut the monthly fee to £1 and still earn the same cashback with the Santander 123 Lite current account.
How much can you make?
All depends on the size of your bills!
But as an example, I earned £294 over the last year from the Santander 123 account, in interest and cashback after paying the monthly fee.
What to watch our for
- Make sure you earn more in cashback than you’ll pay in the monthly fee. Both NatWest and Santander have cashback calculators on their website so you can try before you buy.
- Meet the minimums. With the Santander 123 accounts, you have to pay in at least £500 a month and set up at least two direct debits. With the £2-a-month NatWest Reward account, you have to pay in at least £1,500 a month and log into internet or mobile banking at least once every three months.
3. Earn interest on your balance
Weirdly, you can earn higher interest if you stash cash in a current account than a savings account. Sadly, this still applies even though several of the high interest current accounts have cut their rates (hard stare at Santander and Lloyds).
Looking at the best buy tables on Savings Champion, the highest rate is 5% paid on up to £2,500 by Nationwide Flex Direct account, if you can pay in £1,000 a month. However, the rate only lasts for a year – then it drops to 1%.
Otherwise, Tesco Bank pays 3% a year on up to £3,000, provided you pay in £750 a month and set up 3 direct debits.
After recent troubles with its internet banking, TSB Classic Plus is meant to be pushing up interest from 3% to 5% a year starting on May 2, but only on up to £1,500. You’ll need to pay in £500 a month, sign up for internet and paperless banking, and log in to internet banking at least once a year. You can also earn £5 a month if you set up two monthly direct debits and another £5 a month if you use your debit card at least 20 times a month.
These rates are pretty much the highest you can earn on cash savings, unless you opt for the Chip automatic savings app (review here) and refer friends to earn up to 5% interest a year.
Plus, remember you’re allowed to earn £1,000 a year in interest as a basic rate taxpayer, or £500 if you’re a higher rate taxpayer, without paying a penny in tax.
How much can you make?
- Max out your balances for a year to earn £290 in interest (£125 from Nationwide, £90 from Tesco Bank and £75 from TSB) plus another £120 in TSB cashback.
What to watch our for
- Make sure you jump through the hoops required. Yes, if you’re not switching accounts it takes time to open an account, and set up internet banking, a standing order to meet minimum income rules and any direct debits required. But afterwards it should take care of itself.
- If you need to pay in a minimum amount to several accounts, set up a standing order in, and then a standing order out again to a different account a few days later. Each month I have money going round in a circle of several accounts and back in time to pay my bills.
4. Add extra money from other products
Some banks reserve their best products for existing customers.
So for example, if you’ve got a bit of spare cash each month, current account customers with Nationwide, First Direct, M&S Bank and Santander can open a regular savings account paying 5% interest a year. You have to commit to a regular direct debit once a month for a year, and usually resist whipping any out again. Accounts can be opened with as little as £0 to £25 a month, and are limited to a maximum of £200, £250 or £300 a month depending on the bank.
Meanwhile Santander, NatWest and RBS all offer cashback credit cards paying 0.5% or more cashback, which refund some or all of the monthly fee if you have specific current accounts.
How much can you make?
Max out all four regular saver accounts, and I calculate you’ll rack up more than £322 interest – £97.50 from First Direct, £81.25 each from Nationwide and M&S Bank and £65 from Santander.
Credit card cashback depends on your spending, but I earn £90 a year by bunging as much as possible on my credit card.
What to watch out for
- Regular savings accounts only last for a year, so you’ll need to find a good home for your money afterwards
- Avoid taking money out, if you can. With the First Direct and M&S Bank regular savers, if you make a withdrawal during the year, they’ll slash your rate to 0.05% or 0.5% respectively. If you might need access to your cash, try the easy access version of regular saver accounts with Nationwide or Santander instead.
- Only use a cashback credit card if you can pay off your bill in full every month. Otherwise, the interest charged is likely to cost more than any cashback you earn.
5. Get a bonus for referring your friends
Some banks will bribe you to recommend their current account to your nearest and dearest.
For example, if you have one of the Nationwide Flex current accounts, and persuade a friend to sign up using your link, you’ll both earn £100. Your friend will need to actually switch their account via the switching service, not just open an additional one, do it within 90 days, and switch at least 2 direct debits.
You can earn up to £500 year if 5 friends switch to Nationwide. More details here, and if you want me to send a link so you can pocket £100 for switching to Nationwide Flex, just let me know!
How much can you make?
Maximum £500 for persuading 5 friends to switch to Nationwide.
What to watch out for
- Use a link. Sadly, just telling your friends about a current account won’t cut it. They’ll need to sign up using your link for you both to benefit.
- Act fast. Refer a friend offers usually only run for a limited time, so if you spot a winner, get recommending!
6. Bag a freebie for being a student
Banks dangle freebies for students, in the hope of profiting from your debts in later life. If you’re about to start studying, check out the best benefits rather than opening an account closest to the student bar.
Santander offers a free 4 year 16-25 railcard, so you get a third off most train travel, which would otherwise cost about £90. NatWest and RBS offer a free four year National Express Coachcard, for a third off coach travel in the UK and 10% Eurolines coach trips to Europe. A shorter three-year card normally costs £30.
How much can you make?
Well, you’d have to spend about £90 for buy your own 4-year 16 to 25 railcard
What to watch our for
- Check the interest-free overdrafts on offer. If you need to borrow more, interest and charges could cost far more than the value of any freebies.
- Beware of cashback. Loads of the student accounts offer up to 15% cashback on certain retailers. Now, I’m normally a fan of cashback on money you’d spend anyway. But ‘selected’ retailers often equates to expensive retailers, and you can’t earn much cashback if you’ve got zip all to spend as a student. Focus on interest-free overdrafts and other freebies instead.
Now over to you- are you stuck with the same old bank? Or have you made money from your current account? Let me know your tips and tricks in the comments, I’d love to hear!
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Monday Money linky
There are so many useful tips here that I need to act on. I didn’t know about the railcard thing, for example, and my son could really benefit. Thanks
Thank you! Hope your son saves loads with the railcard.
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One of the things that stops me from opening accounts with other banks is the lack of branches about these days. I still get a lot of cheques to pay in plus for security reasons I refuse to take cash out of ATMs.
Wow interesting that you don’t use ATMs. Do you have a Post Office nearby? I pay in cheques to my First Direct account via a Post Office, and they accept payments in from lots of other banks too. Might widen your choice if you did want to open a new account.
There are so many great tips here! I’ve made a note of a couple of things to do 🙂
Oh good I’m glad! Hope it helps make the most of your money.
Thanks for these! The tip about setting up a standing order to go in and then back out, and then repeating, to make sure that you hit the minimum amounts each month is super helpful – I’d never quite got my head round how people manage to get the benefits of multiple accounts. Super simple once you know how!
Glad the standing order tip helped! You could also use the same amount twice – so standing order for £500 in and out early in the month, and in and out later in the month, to make up a £1,000 a month minimum. Takes a bit of time to set up at the start, but then looks after itself.
I remember the good old days of not having to close your previous bank account in order to switch – I really miss those!
I might look into the cheaper Santander current account – that’s a great amount of cashback and interest!
Yes, sad days now you mostly have to switch and close the old account! The banks wised up. Just not for the cheaper Santander 123 Lite account, you only get the cashback, not interest. I use the Santander 123 with a higher fee because I do have some savings so I’m keen to earn interest.
Great tips here.
I’ll put my hand up and admit that I was once one of those that didn’t switch as it seemed to be such a hassle, but there aren’t any excuses nowadays with the current account switch guarantee
Thanks David! The current account switch guarantee really has made switching less hassle, plus they’ll reimburse you for charges etc if something does go wrong.
Great piece! Didn’t realise so much was up for grabs.
I was shocked myself when I actually started adding it up.
Thanks for the great tips! I’m definitely going to go and switch my bank account now, I thought about it ages ago but had completely forgotten until I just read your post. I also have a Nationwide Flex, so I’ll have to try and persuade people now that they want one too!
Reckon most of us have good intentions about switching accounts, which never quite happen. But there are some good offers and good account around if you do get round to it.
I’ve been taking advantage of the bank sign up bonuses for past few months. Just switched mine & Mr2ps accounts to First Direct at the weekend to bag the £125. We have separate accounts specifically for bagging these bonuses.
I need to investigate Natwest & Santander a bit more as we have Club Lloyds accounts so are going to drop to 1.5% in july – not happy!
Nice work bagging the bank bonuses. Share your pain about Club Lloyds cutting their interest. I do like the perk of annual ‘lifestyle benefit’ cinema tickets though, we actually use those.
Some really good tips here. I’ve already done the first direct switch but need to swap again to avoid there fee’s!
Good call about making sure you avoid fees. Think you can actually avoid paying them by opening a savings account, if you wanted to stay with First Direct. Its customer service really is excellent.
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