More than 118,000 bank users switched account in October via the official service — a new record.
They are being lured by large cash rewards of up to £200, paid out in days. Some banks are so swamped with new customers that they have been forced to withdraw the incentives altogether.
Cash offers to move your account have existed for years, but the stakes have ramped up in 2022.
Rich rewards: Cash incentives to switch bank accounts have existed for years, but the stakes have been ramped up in 2022
Until last week, Nationwide Building Society offered £200 to use the Current Account Switch Service (CASS) to join from a rival — its biggest-ever incentive.
HSBC still has a £200 switching offer. Other top deals include £175 from Halifax and First Direct.
Experts say the jump in the number of customers moving account is partly due to the cost of living crunch, which has left many families hunting for easy ways to boost their budgets.
Some switchers say they have taken advantage of the cash offers to buy Christmas presents.
Tom Riley, Nationwide director of retail, says the big incentive was launched at the start of October 2022 to attract a new wave of switchers who might not have been tempted before.
The higher amount worked better than the building society had expected.
‘The big carrot of £200 was set up in the hope of tipping first-timers into switching. It has been our most successful incentive current-account drive to date.
‘People are money-conscious at the moment and they took advantage,’ he says.
As well as the bigger rewards on offer, customers are being promised quicker bonus payments. Mr Riley says those who have switched using CASS now get the payment within ten days if they hit the required criteria — two direct debits on the account.
C ASS was launched in late 2013. It allows customers to switch current accounts easily online — with a guarantee that if things go wrong they’ll be compensated.
October 2022 was the biggest month ever for switches. Nationwide has been the biggest winner since CASS began by a considerable distance.
According to data from comparison website MoneyComms, Nationwide has added a net total of 679,476 customers through CASS. That’s the difference between joiners and leavers.
Nationwide’s previous record three-month period was between January and March 2019, when nearly a net 40,000 people moved.
It confirmed that the figure for October and December this year will be ‘significantly higher’, thanks to its £200 offer. That means Nationwide will have paid out more than £5 million in cash to switchers.
Its total net number of switchers is double that of next-nearest rival, Santander, which has had a net 329,901 join from rivals using CASS.
Andrew Hagger, founder of MoneyComms, says: ‘Many of the switches are down to the incentives on offer. Cash bribes do make a difference and can change the quarterly figure vastly.
‘There is also plenty of churn —that suggests there are some switchers who stay for the medium to long-term, but plenty who jump ship for the next cash handout.’
Other big winners include app-only challenger banks Starling and Monzo.
Neither offer switching bonuses, and have only been on the list since 2018. But despite that, they’ve had 171,728 and 154,343 switches respectively.
Top deals: Until last week, Nationwide Building Society offered £200 to use the Current Account Switch Service. HSBC still has a £200 switching offer. Halifax and NatWest offer £175
The other two banks to have gained more new customers than they’ve lost with CASS are Halifax and HSBC.
HSBC — whose figures include stablemate First Direct — is offering £200 to switch.
To qualify, you need to set up two direct debits or standing orders and pay £1,500 a month into the account.
The High Street giant, which faced fury last week for axing another 114 branches — which will shrink its network to just 327 — says it will pay within 20 days.
First Direct offers £175 for those using CASS. It pays after 28 days. Meanwhile, Halifax is again offering £175 to switch to its current account. Like Nationwide, the bank offers payment in ten days.
Strong competition has ramped up the bonuses, according to Andrew Hagger.
‘A few years back providers found a £100 cash bribe was sufficient to tempt customers to switch — but that won’t cut it now.
‘Many of the recent incentives are now in the £175 to £200 bracket as providers are increasingly desperate to win new business from their rivals,’ he says.
Josie Dom decided to switch to NatWest after spotting it was offering a £175 welcome bonus.
The 52-year-old children’s author from Colchester, Essex, had banked with Halifax, but was disappointed when it stopped offering a £3 monthly reward for staying in credit.
She moved in October, a process she describes as ‘really easy’.
Josie plans to spend the £175 on a Christmas present for her son. She says: ‘If banks are offering welcome bonuses then why wouldn’t you switch?’
Catherine McKernan was one of thousands of people who were persuaded to move their account to Nationwide because of its £200 switching offer.
The marketing manager from County Tyrone, Northern Ireland, had been with Allied Irish Banks (AIB) for 15 years, ever since her parents set up her account when she was a child. But the offer was too good to miss — so she switched for the first time ever in early November.
Catherine, 29, says: ‘The incentive was the biggest motivating factor for me.’
The clear losers from the CASS battle are NatWest/RBS and Barclays. NatWest and RBS have lost a net 512,473 customers to rivals.
And every quarter since CASS was launched, Barclays has lost a net number of customers. Since the start of 2014, it has shed a net 502,755 customers.
According to Money Mail analysis of the CASS data, Lloyds Bank, Co-op Bank and TSB are the next biggest net losers.
David Piper, head of service lines at Pay.UK, operator of CASS, says: ‘Amid rising living costs, people are increasingly looking for a current account that works best for them… offering positive on and offline experience as well as quality customer service.
‘This is continuing to lead many to consider different providers.’
CASS says in the past three months of data it holds, 99.3 per cent of switches were made within its seven-day timeframe.
The big uptick in switchers in October comes after a lull in July when a total of just 57,204 people moved accounts using CASS. Fewer switching incentives were then on offer.
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