Is it becoming more difficult to switch bank accounts to get a cash bonus?

Banks are making it harder for customers to earn cash bonuses for switching bank accounts.

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

But now banks have introduced more switching requirements to discourage “serial switchers” from constantly switching accounts just to make money.

These include transferring two direct debits, making five or more debit card payments and opening an additional savings account.

The average number of requirements across all bank switching deals has doubled from 1.6 to 2.9 in a year, data from comparison website Finder shows.

Meanwhile, the maximum number of requirements a bank can impose on customers switching cards to receive a cash bonus has risen to six, up from two just four years ago.

This marks a major shift from four years ago, when almost all exchange transactions simply asked customers to log into the banking app and deposit a certain amount, according to Finder.

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

Why do banks make it harder to change?

In an effort to keep customers as long-term current account holders, rather than those who will pick up the cash and run to the next bank offering a change deal, banks have been imposing more restrictions.

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

Some savvy customers have been able to earn over £1000 by switching banks to get switching bonuses.

Louise Bastock, money expert at Finder, said: “We’re in a new, stricter era of switching providers, and banks seem to be looking to deter serial switchers with extra rules, but they’re still a great way to make some extra money.”

Figures from the Current Account Transfer Service (CASS) showed that between July and September 2023, when NatWest had a £200 transfer deal, more than 94,000 people turned to the bank and it topped the net gains table for that quarter.

However, over the next three-month period (October-December 2023), the bank lost more than 50,000 customers due to account switching, representing 54 percent of previous profits.

This caused them net losses of over 43,000, going from the top to the bottom of the leaderboard in just three months.

During this same period, Nationwide launched a £200 switch offer and gained over 190,000 new customers.

TSB, for example, offered a restricted exchange deal in August 2024 paying up to £190.

The first £100 arrived in customers’ accounts as cash payments and the remainder came in cashback payments, with customers able to earn between £90 and £120 in cashback within the first year of opening the account.

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

Data shows that more restrictions discourage potential customers from switching carriers.

More than three-quarters of people have never switched checking accounts 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 the money.

Banks offer less cash due to change

The amount of money banks offer as a bribe to change your checking account has fluctuated over time.

For most of last year, the standard price for most banks’ switch offers was £200. In recent months, banks that have launched a switch offer are charging £175.

Finder data reveals that in 2020, the average amount paid by banks as part of a bank switching incentive was £122. This figure rose to £203 in 2021, before falling to £157 in 2022.

Throughout 2023, banks paid an average of £194 for contract changes, a figure that fell to £183 during the first half of 2024.

Bastock said: ‘Banks have been experimenting with how much they offer, given there is a high turnover of customers who get a switching deal and then leave shortly after.

‘This has included a reduction in the value of bonuses given and the addition of additional criteria such as using the debit card a certain number of times or gradually giving out the bonuses they give if a customer stays in the store for a certain period of time. This is to try and ensure that new customers stay with them for longer.’