How far will the banks go to entice new customers?

Nationwide is offering a cash incentive for switching current accounts. Chiara Cavaglieri reports

Nationwide is the latest bank hoping to draw in customers by offering a short-term, £75 switching incentive. The offer expires on 5 March, but how does the Nationwide FlexAccount compare with the other big current account players on the market?

In purely financial terms, the building society's cashback incentive is not the most generous around – Alliance & Leicester's (A&L) Premier Account and First Direct's 1st Account offer a £100 switching incentive – although the A&L offer is due to end on 7 March. But, the first hurdle when comparing current accounts is to decide how the various options might fit in with your needs over the lifetime of the account.

"Current accounts are quite difficult beasts to compare because of the array of costs and features, and the fact that different people have different usage profiles," says David Black, a banking specialist at Defaqto.

Although it falls short of the best cashback offers, Nationwide comes into its own when you look at the terms of holding the account. First, there are no stipulations about the amount of money you deposit into the account, whereas First Direct demands at least £1,500 for three months and charges £10 for any month this is not kept up. Similarly, Halifax's Reward current account has a £5 monthly bonus but only for months that you deposit at least £1,000. A&L customers must pay in at least £500 a month to secure their £100 cash bonus. And, if you fail to pay in this money, A&L levies a £5 monthly fee.

The Nationwide deal is also open to existing customers, whereas most incentives are only for new customers, and if you have held an Abbey or Cahoot account in the previous three months you cannot get the A&L bonus because they are all part of the Santander banking group.

"Any switching incentive should be a bonus and not the main reason," says Michelle Slade of financial comparison site Moneyfacts.co.uk.

If you regularly dip into your overdraft, compare the facilities available. A&L is highly competitive with a 0 per cent equivalent annual rate (EAR) overdraft and no fees for pre-agreed overdrafts for the first 12 months. Even after the first year, there is a 50p daily charge which is capped at £5 per month. The First Direct account also looks good with the first £250 interest free and 15.9 per cent payable above this amount. In contrast, Nationwide charges 18.9 per cent EAR for authorised and unauthorised overdrafts and the Halifax account could be a real sting, charging £1 per day for being in the red and £2 if your debit balance reaches £2,500.

Halifax's £5 monthly incentive applies whether you are in credit or overdrawn. The £5 reward is fixed and ongoing, so as long as you can guarantee depositing £1,000 a month, you can rely on having an account paying you £5 every month. Santander's Preferred In-Credit Rate current account offers an impressive 6 per cent AER on balances up to £2,500, which is fixed for the first 12 months, as long as you deposit at least £1,000 a month.

Keep an eye out for additional perks. For example, the accompanying debit card to the Nationwide FlexAccount is ideal for travellers because it charges nothing for European transactions and just 1 per cent in the rest of the world. For other travel goodies, the A&L Premier account comes with free annual multi-trip European travel insurance. Also, once you're a customer you can apply for the Santander Zero card and enjoy 12 months at 0 per cent interest on balance transfers.

A bank's reputation is another consideration. The big high-street names don't often fare well in this area, but First Direct prides itself on its customer service to the extent that it will give you £100 if you aren't happy and want to move to another bank.

"All that some people want from their bank is a reliable and consistently good level of service," says Andrew Hagger of Moneynet.co.uk. "When you look at surveys, you'll see First Direct, Smile and The Co-operative Bank at the top for customer satisfaction."

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Trainee Recruitment Consultant - Swiss Banking and Finance

    £20000 - £25000 per annum + Uncapped commission: SThree: Can you speak German,...

    Ashdown Group: Marketing Executive - 6 month FTC - Central London

    £25000 - £30000 per annum + benefits: Ashdown Group: An exciting opportunity f...

    Ashdown Group: Junior Project Manager (website, web application) - Agile

    £215 per day: Ashdown Group: Junior Project Manager (website, web application ...

    Guru Careers: Software Engineer / Software Developer

    £40-50K: Guru Careers: We are seeking an experienced Software Engineer / Softw...

    Day In a Page

    Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

    Fishing is on Nigel Farage's mind

    Ukip leader casts a line to the disaffected
    Who is bombing whom in the Middle East? It's amazing they don't all hit each other

    Who is bombing whom in the Middle East?

    Robert Fisk untangles the countries and factions
    China's influence on fashion: At the top of the game both creatively and commercially

    China's influence on fashion

    At the top of the game both creatively and commercially
    Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

    The man known as GOD has a reputation for getting the job done

    Lord O'Donnell's three principles of rule
    Rainbow shades: It's all bright on the night

    Rainbow shades

    It's all bright on the night
    'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

    Bread from heaven

    Dutch survivors thank RAF for World War II drop that saved millions
    Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

    How 'the Axe' helped Labour

    UK will be 'run for the wealthy and powerful' if Tories retain power
    Rare and exclusive video shows the horrific price paid by activists for challenging the rule of jihadist extremists in Syria

    The price to be paid for challenging the rule of extremists

    A revolution now 'consuming its own children'
    Welcome to the world of Megagames

    Welcome to the world of Megagames

    300 players take part in Watch the Skies! board game in London
    'Nymphomaniac' actress reveals what it was really like to star in one of the most explicit films ever

    Charlotte Gainsbourg on 'Nymphomaniac'

    Starring in one of the most explicit films ever
    Robert Fisk in Abu Dhabi: The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers

    Robert Fisk in Abu Dhabi

    The Emirates' out-of-sight migrant workers helping to build the dream projects of its rulers
    Vince Cable interview: Charging fees for employment tribunals was 'a very bad move'

    Vince Cable exclusive interview

    Charging fees for employment tribunals was 'a very bad move'
    Iwan Rheon interview: Game of Thrones star returns to his Welsh roots to record debut album

    Iwan Rheon is returning to his Welsh roots

    Rheon is best known for his role as the Bastard of Bolton. It's gruelling playing a sadistic torturer, he tells Craig McLean, but it hasn't stopped him recording an album of Welsh psychedelia
    Morne Hardenberg interview: Cameraman for BBC's upcoming show Shark on filming the ocean's most dangerous predator

    It's time for my close-up

    Meet the man who films great whites for a living
    Increasing numbers of homeless people in America keep their mobile phones on the streets

    Homeless people keep mobile phones

    A homeless person with a smartphone is a common sight in the US. And that's creating a network where the 'hobo' community can share information - and fight stigma - like never before