Can I switch cash between my main bank account and a new one every month for an incentive?
One of our experts answers a reader's question.
25th February 2020 15:49
by Andrew Hagger from interactive investor
Q
“I am considering switching my current bank account to one with rewards plus a cash incentive to switch. Most of them have a requirement for a minimum amount to be deposited each month to be eligible. If the required amount each month is, say, £1,000, can I just set up a standing order from another one of my accounts to pay £1,000 each month into the new account and then set up another later monthly standing order on the new account to pay the £1,000 back into my other account?”
From: RA/Loughborough
A
A few years ago you would have been able to get a bank opening incentive payment by paying in money and withdrawing it again as you describe, but banks have got wise to people taking the money and running and so they have tightened their criteria.
Nowadays you will still need to meet the minimum monthly income rules but additionally most banks will require that you have a minimum number of active monthly direct debits on the account, too – this can range from two to four depending on the bank you choose.
The banks are looking for customers to use the account with them as their primary bank account, hence this costly loophole has been closed. The reason banks offer such cash incentives is to attract customers for the medium to long term, so over time it gives them the opportunity to cross-sell additional products such as mortgages and investments. So the days of taking the rewards from multiple banks by simply switching monies from one bank to another are over I’m afraid.
Andrew Haggar is the founder of personal finance website Moneycomms
Do you have a money question for our panel of experts?
At Moneywise, we have a panel of top experts to help with your money and investing questions. If you have a tax issue that’s keeping you awake at night, a question about investing that you’ve always wondered but been too shy to ask, or even need a full money makeover for free, we’d love to hear from you.
If you have been treated unfairly by a firm send the details to Moneywise’s Fight for your Rights and we could take up the fight for you.
Email fightback@moneywise.co.uk
If you have a question about your investments or investing in general, put it to our Investment Doctor.
Email editor@moneywise.co.uk
If you have a question about your personal finances – anything from tax to state pensions, inheritance tax, property sales and more – write to our Ask the experts panel.
Email advice@moneywise.co.uk
Would you like a full money makeover? We will arrange a free one-to-one meeting for you with an FCA-regulated independent financial adviser worth over £2,000.
See Moneywise.co.uk/money-makeover for more details.
This article was originally published in our sister magazine Moneywise, which ceased publication in August 2020.
These articles are provided for information purposes only. Occasionally, an opinion about whether to buy or sell a specific investment may be provided by third parties. The content is not intended to be a personal recommendation to buy or sell any financial instrument or product, or to adopt any investment strategy as it is not provided based on an assessment of your investing knowledge and experience, your financial situation or your investment objectives. The value of your investments, and the income derived from them, may go down as well as up. You may not get back all the money that you invest. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.
Full performance can be found on the company or index summary page on the interactive investor website. Simply click on the company's or index name highlighted in the article.