United Kingdom

HSBC launches welcome bonus meaning bank account switchers could earn £325

Customers willing to spend a few hours buried in banking paperwork could potentially earn themselves £325 in one-off switching bonuses, after HSBC became the third bank in three weeks to launch a three-figure welcome offer.

Those who switch to either its Advance or Premier accounts through the official switch service can earn £125 if they open an account and move over a previous one with at least two direct debits or standing orders within 30 days.

HSBC's return to the switching arena signals that the competition for current account customers has really heated up among Britain's biggest banks as they relaunch welcome bonuses in the aftermath of the coronavirus lockdown, even if they are smaller than they were before.

The return of the current account competition: HSBC, Lloyds and RBS have all relaunched bank account switch bonuses in the last three weeks

The bank has gained at least 15,000 net current account customers through the official switch service in every three month period since the start of 2018 on the back of several generous switch bonuses.

It gained nearly 34,000 net accounts in the first three months of 2020 on the back of a £175 welcome offer, which it shelved towards the end of March as it focused on its existing customers.

Newcomers cannot have held a First Direct, HSBC or M&S Bank account since January 2017, and those signing up to its Advance account must pay in £1,750 a month or £10,500 in six months.

Those looking to switch to its Premier account meanwhile must either have an annual income of £75,000 and hold a HSBC mortgage, life insurance or investment product, or hold £50,000 in savings or investments within six months of opening an account.

HSBC gained a net 33,994 current account customers in the first three months of this year on the back of a market-leading £175 switch offer. It has relaunched the welcome bonus but shaved off £50

Its offshoot First Direct's current account, and the accompanying £100 switch bonus it was offering newcomers, remains closed six months on from the bank's decision to shut its doors to new customers.

However, it told This is Money that it will reopen to new customers again from next month, but it remains to be seen if First Direct will offer the bonus.  

But consumers on the hunt for three-figure cash bribes still have plenty of options, with Royal Bank of Scotland and Lloyds Bank both offering £100. 

It is the first time since mid-March that three banks have each offered at least £100 for switchers.

Royal Bank of Scotland launched its own £100 switch bonus at the start of September, following the lead initially of Halifax, which was the first bank to bring back a cash carrot

RBS only requires customers switching to its free Select or £2-a-month Reward account to open an account by 19 November, switch, pay in £1,500 and log in to mobile or online banking by the end of December. 

The money will be paid by 29 January.

Meanwhile Lloyds' switch bonus, which ends on 9 November, is open to those who switch to its Club Lloyds or Club Lloyds Platinum accounts. 

Club Lloyds comes with a £3 monthly fee if customers do not pay in £1,500 a month, while Club Lloyds Platinum costs £21 a month and comes with perks like travel insurance and breakdown cover, in addition to the same rules.

How current account switching collapsed this year 
Month  Total switches 
January 2020 71,361
February 2020 96,122 
March 2020 113,037 
April 2020 41,549 
May 2020 28,678 
June 202027,965 
Source: Current Account Switch Service 

How to (potentially) take advantage of all three 

The lack of requirements to maintain direct debits or keep accounts open for a certain period of time mean that, provided newcomers have not held a HSBC account since January 2017, received a switching bonus from RBS, customers could potentially make £325 from all three banks as long as they move fast enough.

Here's how: 

Customers can switch their existing bank account to Club Lloyds by 9 November and pay in enough money to avoid the £3 fee, then open and switch to HSBC after they receive the money, which Lloyds says will be paid within 10 days.

Provided they set up direct debits or standing orders of as little as £1 and pay in £1,750, they can open and switch to HSBC Advance and receive £125 within 30 days.

Who did best in 2019? 

The coronavirus pandemic put the current account competition into the deep freeze for six months of this year, but banks still gained thousands of customers last year through the official switch service.

Here are the three which did the best: 

- Nationwide Building Society - ‭105,157‬

- HSBC - ‭63,635‬ 

- Monzo - ‭63,164

And finally, as long as the deal is still open, customers can open and switch to RBS Select, pay in £1,500 and log into mobile or online banking, with the money paid into their account by next February. 

While savings rates are slowly beginning to improve, it would still take around £28,000 held in the top easy-access account around, offered by Skipton Building Society and paying 1.2 per cent, to match the £325 offered by at the moment by the three banks.

However, changing current accounts over such a short period could potentially have an impact on a customers' credit file, so there is a reason to be cautious before diving in.

James Jones, head of consumer affairs at Experian, warned: 'While the appearance of a new hard footprint and a new account on your credit report may lead to a temporary score reduction, moving forward your credit score should be fine as long as you don't chop and change too much or shift everything at once, as lenders prefer to see stability in your credit accounts.

'For example, try not to move home, change credit cards or apply for several different new current accounts at the same time.

'If you are planning on applying for a mortgage soon, it would make sense to be more cautious. Showing a steady length of time with the same bank will typically work in your favour for a mortgage application.'

This could potentially cost customers money in the form of worse credit card or loan deals or a lower likelihood of being accepted for a mortgage. 

Watch out for overdraft rates 

While customers who look to switch will often have their eyes on what they can gain from paying in money, it also pays to keep an eye on the cost of taking it out too.

With that in mind, switchers looking enviously at HSBC, Lloyds and and Royal Bank of Scotland's new welcome bonuses should beware the overdraft costs at both if they burn through that sum and then the rest of their money.

While RBS dropped its temporarily overdraft rate to comply with Financial Conduct Authority rules designed to protect customers from new, higher overdraft charges, both banks are now back to charging close to 40 per cent for borrowing.

RBS charges 39.49 per cent, and HSBC and Lloyds 39.9 per cent by default, although some customers of the latter will pay as much as 49.9 per cent.

To borrow £500 for 10 days with RBS would cost £4.62, while with HSBC and Lloyds it would cost £4.60, according to figures calculated by Moneycomms' Andrew Hagger.

THIS IS MONEY'S FIVE OF THE BEST CURRENT ACCOUNTS

Santander's 123 Lite Account will pay up to 3% cashback on household bills. There is a £1 monthly fee and you must log in to mobile or online banking regularly, deposit £500 per month and hold two direct debits to qualify.

Santander

RBS's Reward Bank Account pays up to £5 a month you pay out two direct debits a month of £2 each and log into mobile banking. The account comes with a £2 monthly fee and you can get a £100 switching incentive if you pay in £1,500 by 30 December.

NatWest

Club Lloyds's Current Account offers benefits such as cinema tickets, magazine subscriptions and dining cards to current account holders. There is no cost if you pay £1,500 each month, otherwise a £3 fee applies. Must hold two direct debits to earn monthly credit interest.

Santander

TSB's Classic Plus Account pays 1.5 per cent interest on balances of up to £1,500. You must pay out two direct debits, register for internet banking and go paperless.

Nationwide

Nationwide's FlexDirect account comes with 2% interest on up to £1,500 - the highest interest rate on any current account - if you pay in at least £1,000 each month, plus a fee-free overdraft. Both perks last for a year.

Barclays

Football news:

Hans-Dieter flick: Bayern players had to overcome the pain threshold to beat Sevilla
Julen Lopetegui: Neuer is an incredible goalscorer. Sevilla didn't use their chances
You should see Goretzky's goal again. Muller's goal and levandowski's discount - the magic of mutual understanding 🤝
Ivan Rakitic: We saw how important Neuer is for Bayern
Mueller - the best player of the match for the UEFA super Cup between Bayern Munich and Sevilla
Sevilla have five defeats in matches for the European super Cup. This is an anti-record
Bayern won 4 trophies in a year. To repeat Barca's record, you need to take two more