Could switching banks help pay for your Christmas? 

More than 118,000 bank users switched accounts through the official service in October – a new record.

They are lured by big cash rewards of up to £200 paid out in days. Some banks are so overwhelmed with new customers that they are forced to withdraw premiums altogether.

Cash offers to move your account have been around for years, but the stakes have increased in 2022.

Until last week, Nationwide Building Society offered £200 to use the Current Account Switch Service (CASS) to join a rival – its biggest incentive ever.

HSBC still has a £200 switch offer. Other top offers include £175 from Halifax and First Direct.

Experts say the increase in customers switching accounts is partly due to the cost of living, which has many families looking for easy ways to stretch their budgets.

Some switchers say they took advantage of the cash offers to buy Christmas presents.

Tom Riley, Nationwide director of retail, says the big stimulus was launched in early October 2022 to attract a new wave of switchers who may not have been tempted before.

The higher amount worked better than the mortgage bank had expected.

‘The large £200 carrot has been set up in the hopes of persuading first-timers to switch. It has been our most successful current account incentive to date.

“People are money conscious right now and have taken advantage of that,” he says.

In addition to the bigger rewards on offer, customers are promised faster bonus payments. Mr. Riley says those who have switched with CASS will now receive payment within 10 days if they meet the required criteria: two direct debits to the account.

C ASS was launched at the end of 2013. This allows customers to easily switch payment accounts online – with the guarantee that they will be compensated if things go wrong.

October 2022 was the biggest month ever for switches. Nationwide is the biggest winner since CASS started by a significant distance.

According to data from comparison website MoneyComms, Nationwide has added a total of 679,476 customers through CASS. That is the difference between entering and leaving.

Nationwide’s previous record three-month period was between January and March 2019, when nearly 40,000 people moved.

It confirmed that the figure for October and December of this year will be ‘significantly higher’, thanks to the £200 bid. That means Nationwide has paid out more than £5m in cash to switchers.

The total net number of switchers is double that of closest rival, Santander, which has had 329,901 net signups from rivals using CASS.

Andrew Hagger, founder of MoneyComms, says: “A lot of the switching is due to the incentives on offer. Cash bribes make a difference and can dramatically change the quarterly earnings.

“There’s also a lot of turnover – which suggests there are some switchers who stay for the medium to long term, but plenty who leave before the next cash distribution.”

Other big winners include app-only challenger banks Starling and Monzo.

Neither offer switching bonuses and have only been on the list since 2018. But despite this, they have had 171,728 and 154,343 transfers respectively.

The other two banks that gained more new business than lost with CASS are Halifax and HSBC.

HSBC – whose figures include stablemate First Direct – is offering £200 to switch.

To qualify, you must set up two direct debits or standing orders and pay £1,500 per month into the account.

The High Street giant, which was furious last week over the cancellation of a further 114 branches – which will shrink its network to just 327 – says it will pay within 20 days.

First Direct offers £175 for those using CASS. It pays after 28 days. Meanwhile, Halifax is again offering £175 to switch to its current account. Like Nationwide, the bank offers payment in ten days.

Strong competition has increased bonuses, according to Andrew Hagger.

‘A few years ago providers discovered that a bribe of £100 was enough to entice customers to switch – but that won’t be enough now.

“Many of the recent incentives are now in the £175-£200 range as providers become increasingly desperate to win new customers from their rivals,” he says.

Josie Dom decided to switch to NatWest after seeing it offer a £175 welcome bonus.

The 52-year-old children’s author from Colchester, Essex, had banked with Halifax but was disappointed when it stopped offering a £3 monthly reward for maintaining credit.

She moved in in October, a process she describes as “really easy.”

Josie plans to spend the £175 on a Christmas present for her son. She says, “If banks offer welcome bonuses, why not switch?”

Catherine McKernan was one of thousands of people persuaded to move their accounts to Nationwide because of the £200 switching offer.

The marketing manager from County Tyrone, Northern Ireland, had been with Allied Irish Banks (AIB) for 15 years, ever since her parents set up her account when she was a child. But the offer was too good to pass up – so she switched for the first time ever in early November.

Catherine, 29, says, “The incentive was the biggest motivating factor for me.”

The clear losers of the CASS battle are NatWest/RBS and Barclays. NatWest and RBS have lost 512,473 net customers to rivals.

And every quarter since the launch of CASS, Barclays has lost a net number of customers. Since the beginning of 2014, it has lost 502,755 net customers.

According to Money Mail analysis of the CASS data, Lloyds Bank, Co-op Bank and TSB are the next biggest net losers.

David Piper, Head of Service Lines at Pay.UK, operator of CASS, says: ‘As the cost of living rises, people are increasingly looking for the current account that best suits them…that has both a positive negative impact and offline experience and quality provides customer service.

“This still causes many to consider different providers.”

CASS says that in the past three months of data it has owned, 99.3 percent of the move was made within the seven-day time frame.

The big increase in switchers in October comes after a lull in July, when a total of just 57,204 people moved their accounts using CASS. Fewer switching incentives were offered at that time.

l.boyce@dailymail.co.uk

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