A MAJOR bank has announced it’s offering free cash for switching accounts just in time to give your balance a boost for Christmas.
It’s also giving account holders a £50 interest-free overdraft buffer to ease burden at what can be an expensive time.
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Nationwide Building Society has launched a new offer of £175 to switch to its FlexDirect, FlexPlus or FlexAccount current accounts.
In order to get the free money, you must switch through the Current Account Switch Service (CASS).
Banks often offer incentives like free cash to attract new customers.
Until recently several bank switch bonuses were up for grabs, but were pulled in the past few weeks.
But that could be set to change as Nationwide is the second bank to bring one back.
Rachel Springall, a finance expert at Moneyfacts Compare, said: “The £175 free-cash perk is a joint-market leading sum with First Direct, so it will be interesting to see if any other providers launch a switching incentive to compete for business in the weeks ahead.
“The FlexDirect (account) will pay up to £5 per month in cashback, but this is not diluted by any account management fee, which is a plus.”
The lender is also set to launch a £50 interest-free overdraft buffer in November, with the exact date to be confirmed closer to the time.
The buffer will apply to overdrafts on the lender’s three main current accounts, which are the FlexPlus, FlexDirect and the FlexAccount.
It’s worth noting that the FlexPlus account does charge a monthly fee in return for benefits such as insurance and breakdown cover.
Springall says Nationwide’s £50 interest-free buffer could also be useful to some people as the Christmas shopping season draws nearer.
She says: “This safety net can make a difference for those who might overspend by a small amount.”
Springall suggested that, in general, current account holders should weigh up the benefits they use as well as the charges for using their account “to see if it’s working hard enough”.
The FlexDirect account gives the holder 5% credit interest on balances up to £1,500 for the first 12 months.
This account also offers an interest-free overdraft for the first 12 months.
Those who open a new FlexDirect account will still get the 5% credit interest rate, and will also receive 1% cashback for the first 12 months on debit card purchases, capped at £5 per month.
For new FlexDirect account openings, the previous interest-free overdraft offer will be withdrawn.
But if you are an existing customer who is benefiting from an interest-free overdraft offer then don’t worry, this will continue until the end of their 12-month period.
We’ve asked Nationwide if there’s a minimum amount you need to pay in to the accounts to qualify for the bonus and will update when we hear back.
While the £175 might look enticing, it is important to consider all aspects of a bank account when planning to change.
So for starters, it is important to look at what fees and charges are associated with an account.
There is no account fee on the FlexDirect or FlexAccount current accounts.
The FlexPlus account fee is currently £13, it will increase to £18 per month from December.
You should consider account opening fees, transaction fees, monthly maintenance fees, any overdraft changes and fees if you plan on spending abroad.
Account management, in terms of your preference for online or in a branch, and eligibility criteria, such as a good credit score, should also be looked at.
Finally incentives and mobile banking are two more important considerations when choosing whether to change accounts.
How to switch bank accounts?
Switching bank accounts in the UK, in the vast majority of cases, can be done using the CASS to move your money and close your old account.
The first step to setting up a new account is done by contacting your chosen bank or building society to open an account.
This can be done by applying online, in branch, by phone, or via the lender’s app.
Step two involves your chosen lender checking your eligibility for an account, and to switch using the CASS.
Following this, you need to select the date you want your old account to close and your new account to open.
You will be required to provide information about yourself and your finances, and present a form of photo ID.
The bank will check your credit report to verify your identity and assess the risk of lending money to you.
Lastly, it is just a case of counting down the days until the switch is complete, with the minimum being seven working days.
What other banks are offering bonus switches?
Right now, options are quite limited with only one other major lender offering incentives to switch.
But don’t fret, lenders often introduce these incentives from time to time, so simply stay on the lookout if you have a particular bank or building society you want to switch to.
FirstDirect are currently offering £175 to customers who choose to make the switch.
To be eligible for the bonus you cannot have had any account with First Direct in the past, and you can’t have opened a current account with HSBC since January 2018.
If this is you, then all you need to do is open the account in app, and switch in an account from a different bank including two direct debits or standing orders within 45 days.
You will also need to pay in £1,000 and make five or more debit card payments within 45 days.
The £175 is paid by the 20th of the following month after you meet the switch bonus criteria.
What is an overdraft and how does it work?
The ins and outs of an overdraft are simple enough to understand, for starters there are two types.
These are arranged and unarranged. An arranged overdraft is a pre-arranged limit that you agree with your bank, while an unarranged overdraft occurs when you go overdrawn without an arranged overdraft.
You will usually be charged interest for using an overdraft, but some providers offer an interest-free amount. This is common with student accounts.
If you manage an arranged overdraft well it is unlikely to have any impact on your credit score.
But, if you do not pay it off regularly, have payments declined, or use the unarranged overdraft, it is likely to have a negative impact.
You should also know that if you do not pay your overdraft off in time, your bank may turn your account over to a collection agency.