Will it become more difficult to switch bank accounts for a cash bonus?

Banks are making it harder for customers to win cash bonuses when they switch bank accounts.

In recent years, lenders have paid switching bonuses of up to £200 to encourage new customers to sign up.

But banks have now introduced stricter switching requirements to discourage ‘serial switchers’ from continually switching accounts just to make money.

This includes transferring two direct debits, making five or more PIN payments and opening an additional savings account.

Data from comparison website Finder shows that the average number of requirements for all bank switching deals has doubled in one year from 1.6 to 2.9.

Meanwhile, the maximum number of requirements a bank can impose on customers who switch for a cash bonus has increased from two four years ago to six.

According to Finder, this is a big change from four years ago, when almost all switching deals required customers to simply log into the banking app and deposit a certain amount.

Finder analyzed 86 bank switching deals on the market over the four-year period from 2020 to 2024.

Why do banks make it harder to switch?

To keep customers in a current account for longer, rather than people withdrawing the money and quickly moving to the next bank that offers a switching option, banks are imposing stricter restrictions.

Some of the additional requirements that have been introduced include transferring two or more direct debits, making five or more PIN payments and opening an additional savings account.

Some savvy customers have been able to earn over £1,000 by switching banks and receiving switching bonuses.

Louise Bastock, financial expert at Finder, said: ‘We’re living in a new, stricter era for switching deals, with banks apparently trying to deter ‘serial switchers’ with extra rules, but it’s still a great way to make some extra money.’

Figures from the Current Account Switching Service (CASS) show that between July and September 2023, when NatWest had a £200 switching deal, more than 94,000 people switched to the bank and it topped the charts for net profits for that quarter.

However, in the subsequent three-month period, between October and December 2023, the bank lost more than 50,000 customers due to account changes, 54 percent of its previous profit.

As a result, they lost more than 43,000 euros net and went from first to last place in the rankings in just three months.

During the same period, Nationwide launched a £200 switching offer and added more than 190,000 new customers.

For example, TSB offered a limited switching deal in August 2024, paying a maximum of £190.

The first £100 was deposited into the customer’s account as a cash payment, with the remainder received in the form of cashback payments. Customers could earn between £90 and £120 in cashback within the first year of opening the account.

To receive cashback, customers had to complete the full switch and then make 20 payments of any amount each month for the first six months the account was open, using their debit card or Google or Apple Pay.

Data shows that stricter rules deter potential switchers.

More than three-quarters of people have never switched their current account to get a switching bonus. Of those, 12 percent said there were too many different requirements, while 14 percent said the cash rewards weren’t worth it.

Banks offer less cash for switching

The amount of cash that banks offer as a bribe when switching checking accounts fluctuates over time.

For most of last year, the standard for most banks’ switching offers was £200. In recent months, banks that launched a switching deal have paid £175.

Data from Finder shows that in 2020, the average amount paid by banks as part of a switching incentive was £122. This jumped to £203 in 2021 before falling to £157 in 2022.

In 2023, banks paid an average of £194 for switching deals. In the first half of 2024, this had fallen to £183.

Bastock said: ‘Banks are experimenting with how much they offer as there is a high turnover of customers who take out a switching deal and then quickly leave.

‘This included reducing the value of the bonuses given out and adding extra criteria, such as using your debit card a certain number of times or dribbling out the bonuses they give out if a customer stays for a certain period of time. This is to try and ensure that new customers stay with them for longer.’

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