Best UK bank accounts 2023: current account switching offers explained - which banks are offering the most?

With the cost of living crisis hitting UK consumers in the pocket, here’s how to claw some of that money back by switching your current account provider

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With inflation eating away at the value of our hard-earned cash and interest rates at their highest level for more than 14 years, 2023 has been as much about the cost of living crisis as 2022 was.

The rate of price rises rose unexpectedly in February but is expected to come down this year - mostly thanks to continuing increases to the Bank of England’s base rate. This measure makes it more expensive to borrow money, but also helps the UK central bank to maintain the value of the pound.

But there is an upside to higher interest rates - it makes saving money more lucrative. While the interest you can currently make through bank accounts doesn’t match the rate of inflation, it’s a better option than allowing your cash to sit somewhere where it doesn’t grow at all.

The situation has led to a flurry of competition among high street banks to get people to switch who they hold their current accounts with. Several big names are offering what are essentially bribes to net new customers, with experts actively encouraging disloyalty to make the most of the situation.

So, what are the best deals out there for switching banks? Here’s everything you need to know.

What is a current account?

As its name suggests, a current account is the sort of account you will use on a daily basis. Essentially, they are key money management tools that allow you to budget your life.

You will tend to need one to receive your salary and pay for everyday goods and services, like supermarket shopping and bus tickets. This type of account may also be used for direct debits, such as those set up to pay for your energy bills or a gym membership.

Banks are offering three-figure sums to switch to their current accounts (image: Adobe)Banks are offering three-figure sums to switch to their current accounts (image: Adobe)
Banks are offering three-figure sums to switch to their current accounts (image: Adobe)

Compared to savings accounts, current accounts tend to pay out much less in interest and often carry a monthly fee. But they may offer cashback on some of your spending (i.e. you earn back a small percentage of the money you’ve paid for something), and tend to allow you to access your money 24/7.

How can you switch current accounts?

While switching banks may sound like something that will take a lot of time and effort, it’s actually pretty simple thanks to the Current Account Switch Service (CASS).

Run by Pay UK - the company that essentially acts as the operator of the UK’s digital banking infrastructure - CASS means the bank you want to switch to does almost all the legwork of switching. All you have to do is ensure you are eligible for the account you would like to switch to, and tell them what date you want the switch to happen on.

Once you’ve signed on the dotted line with your new bank, they will transfer across all of your account’s incoming payments (for example, your salary) and outgoings (including any direct debits you have), as well as the amount of money you have in that account. Under CASS, you will be almost completely covered if anything goes wrong with the switch.

We have been asked by readers whether there is a limit to the number of times you can switch current account to take advantage of these ‘bribe’ offers (more below). Some banks have said they will not pay out to people who have previously accepted a golden handshake from them. while others have not said anything. It’s worth checking with the bank whether or not you’re eligible for the switch offer.

One thing you should be aware of is switching is not a good idea if you’re about to apply for a mortgage. It could indicate to a lender that you’re financially unstable (even if that’s not actually the case). Consumer expert Martyn James recommends asking the bank you want to switch to whether they run a hard or a soft credit check. A hard check will appear in your credit rating, whereas a soft one will not (and will not impact your credit score).

What deals are banks offering?

There was a flurry of switching offers at the back end of 2022, as the Bank of England’s decision to significantly increase interest rates in the wake of Liz Truss’s mini budget suddenly made bank accounts much more lucrative.

You can get your hands on free money by switching current account (image: Adobe)You can get your hands on free money by switching current account (image: Adobe)
You can get your hands on free money by switching current account (image: Adobe)

In a bid to stand out from the competition, leading banks began to offer what Martin Lewis’s MoneySavingExpert (MSE) consumer site has described as legal bribes. They have been advertising three-figure golden handshakes for anyone switching a current account over to them.

While these deals have quietened down a bit, several are still available on the market. To get your hands on them, you have to switch your current account over to a brand in a different banking group. You may also have to meet certain criteria for incomings and outgoings.

Here are the high street bank switching bonuses that are currently on offer:

  • Natwest

The high street bank is offering switchers £200 if they move their current account over to any one of its current accounts. This includes its no-fee Select account and its Reward account.

The latter offers the better deal out of the two. For a fee of £2 a month you get 1% cashback (from a select list of Natwest’s ‘retail partners’ including Morrisons and Caffe Nero), and can earn £4 a month back if you have two or more direct debits, plus an extra pound just for logging into the mobile app once a month. You can then choose to bank your rewards (i.e. convert them into real money that gets deposited in your account), trade them up (convert them into vouchers for selected retailers) or donate them to charity.

Current accounts are essential for most consumers (image: Adobe)Current accounts are essential for most consumers (image: Adobe)
Current accounts are essential for most consumers (image: Adobe)

You also get access to Natwest’s Digital Regular Saver, which pays 6% in interest on balances up to £5,000, and its ‘round ups’ feature that saves the change on purchases to the nearest pound. This feature is currently being pushed by the bank as part of a prize draw that could see you win a top prize of £10,000 if you switch it on before 21 April 2023.

To be eligible for the £200, you cannot have received a switching bonus from Natwest or any of its sister banks (Royal Bank of Scotland or Ulster Bank) since 1 October 2017. You also have to switch from a non-Natwest account and then deposit £1,250 into the new account as well as log into the Natwest mobile banking app within 60 days. Once you’ve taken these steps, £200 will be paid into the account within seven days.

  • First Direct

You can bag £175 for switching to First Direct’s 1st Account - a no-fee current account that comes with access to a regular savings account that pays out 7% interest (on up to £300 per month). This account also typically comes with a 0% overdraft of £250 (so long as you’ve arranged it).

So long as you switch from a non-First Direct account (or a HSBC account that was opened before January 2020 - the two brands are in the same banking group), and pay in at least £1,000 within three months of opening the account, you will receive the money.

NationalWorld’s view is that this offer is decent, given the big savings rate and First Direct’s reputation for good customer service. However, Natwest’s Reward account offers a better deal for your day-to-day banking, so long as you meet its eligibility criteria.

  • HSBC

The latest deal comes from First Direct’s sister bank HSBC, something which means this deal will not be available to you if you have received the offer listed above, or have held an account with either brand at any point since 1 January 2020.

HSBC is offering £200 if you switch to either its Advance or Premier Bank Account current accounts. To take advantage, you have to have at least two direct debits or standing orders, as well as make a deposit of at least £1,500 into the account within 60 days of opening it. You will then receive the cash within 20 days of meeting the terms of the deal.

HSBC Bank has bought the UK arm of SVB (image: AFP/Getty Images)HSBC Bank has bought the UK arm of SVB (image: AFP/Getty Images)
HSBC Bank has bought the UK arm of SVB (image: AFP/Getty Images)

Neither account charges a monthly fee. Advance comes with HSBC’s ‘Home&Away’ offers programme, which can allow you to make savings at specific retailers. The account also gives you access to a regular saver paying out 5% interest on monthly deposits of up to £250.

The Premier Bank Account comes with worldwide travel insurance from Aviva. It also offers preferential mortgage and ISA rates, and fee-free global banking (if you hold HSBC accounts in other countries). However, you have to have an income of at least £75,000 a year plus a mortgage or other service with HSBC, or savings or investments worth at least £50,000 with HSBC UK within six months of opening the account.

NationalWorld’s view is that HSBC’s switching offer is not as lucrative as the one offered by Natwest given it does not offer cashback or money for direct debits. But, if you’re after the switching bonus above all else, then a free £200 is a nice thing to have.

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