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Want to pocket £100 for switching your current account?

Want to pocket £100 for switching your current account?

Sick of your existing current account? The notion that switching bank accounts is an anxiety fuelled, cumbersome and tedious process was dissolved in 2013. The introduction of the Current Account Switch Service provides a 7-day switching process - moving all incoming and outgoing payments, transferring your outstanding balance and ensuring your old bank account is closed. Always look out for the below logo as this free government backed service attempts to make it as easy as 1,2,3.  

In reality, many of us do nothing as we sit proudly within our comfort zone. Doing nada can leave you with a huge opportunity cost and shaking things up at the beginning of the new tax year could be just what you need. The starting point is understanding your financial goals and what's important to you. Some adore accounts which pay interest on balances or provide cashback rewards, others rely on overdraft facilities, whilst some love packaged accounts which provide bolt-on insurance. For those looking to make hard, cold cash...listen up. 


What's on offer?

£100 cash for simply switching your current account. As an added bonus, you also get the first £250 of your overdraft interest free (15.9% EAR above that). 

What are the rules?

To grab this free money, you must be a NEW customer and deposit £1,000 within 3 months of opening the account. Furthermore, closing your existing bank account and using the Current Account Switch Service is essential. Notably, these guys provide the Current Account Switch Guarantee. If anything goes wrong during the process, they promise to clean up any mess and cover any losses you might incur. In other words...

Source: Current Account Switch Service, 2016

When do I get paid?

The £100 is credited to your new First Direct 1st Account within 28 working days of you meeting their eligibility criteria. 

Don't fool me, what about account fees? 

For the first 6 months you have a fee free bank account. After this period you get hit with a £10 monthly charge. However, this doesn’t have to be the case. Here are 3 ways to keep account fees at ZERO:

  1. Pay a minimum of £1,000 into the account every month
  2. OR maintain an average monthly balance of £1,000
  3. OR just simply expand your First Direct product range. Adding certain products, such as, a credit card, personal loan or home insurance ensures you are exempt from the £10 fee. Check the fine print to see which financial products qualify. 

What happens if I don’t like the bank account? 

First Direct are praised for their first class customer service. After 6 months (but before a year), if you don't believe the bank account is for you, they give you £100 cash on exit! If you have paid at least £1,000 a month into your account for 6 months, not banked with them before and originally switched initially using the Current Account Switch Service…say hello to another £100. 

What other features are available? 

Along with managing your money on their mobile app, the First Direct 1st account gives you the ability to ‘sweep’ spare cash into a savings account on a date of your choice. Not groundbreaking, but a handy tool for lazy savers. In terms of added benefits beyond a cash bonus and a interest free overdraft for the first £250, check out my top picks below:

  1. For £15 a month, you get some interesting add-ons. Worldwide Travel Insurance with Aviva, basic Motor Breakdown Cover with AGA International SA and basic mobile phone insurance with Allianz. Along with reduced charges for non-sterling cash withdrawals, getting the  'First Directory' add-on might be worth the £180 yearly price tag. 
  2. If you have a 1st account current account, you can also open its regular saver - this gives you 5% interest fixed for 1 year. You can deposit between £25-£300 a month, however, they are very strict on missed payments and penalise you for withdrawals.

Anything else I should know?

First Direct are a branchless bank competing against the best current accounts out there. Interestingly, they have been praised for their outstanding customer service over their years, however, their owners HSBC have not adopted this halo status. A bit of branding can go a long way! Given First Direct is a part of the HSBC family, they share the £85,000 UK savings safety guarantee with them. What does this mean? Holding more than this threshold across these two institutions leaves you exposed rather than diversified.

Concluding thoughts

Switching current accounts is no longer the headache it used to be and the 7-day switching service is there to create healthy competition and kick poor performing banks up the backside. A £100 cash offering is appealing, however, think about what matters to you. In this instance, you must switch your everyday banking to First Direct, the 1st Account pays ZERO interest on balances, whilst if not maintained accordingly you will get hit with a £10 monthly account fee. If the risk-reward profile suits you…then great, however, don’t dismiss the allure of non-cash benefits!

Looking for alternatives to First Direct? Take a look at the Co-op bank (paying you £110 to switch) and M&S bank who currently offer similar incentives.


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