Get £150 by opening a First Direct current account
First Direct is offering new customers up to £150 to switch to its current account.
Previously the bank offered £125 to new customers, but it will now pay a £150 sign-up bonus to people who apply via MoneySupermarket.com. This matches the best introductory deal previously available, offered by Clydesdale and Yorkshire Bank.
First Direct was nominated the most trusted current account provider for the fifth time at the 2015 Moneywise Customer Service Award, based on the views of 30,000 voters. It also received the award for call centre service, and was commended in the savings category.
The account doesn't pay interest on in-credit balances but customers are eligible for the First Direct Regular Saver, which pays a market-leading 6% AER for a year on monthly deposits of £25 to £300.
For those looking for interest on their current account deposits, the Clydesdale and Yorkshire Bank accounts pay 2% AER on the first £2,000 in the account, and for larger balances, the Santander 123 account (which has a £2 a month fee) pays up to 3% interest on balances between £3,000 and £20,000.
Peter Harrison, head of money at MoneySupermarket, said: "Ultimately, people need different things from their current account, some are always in credit so should look for big cash incentives and in-credit interest, but others will need to check how much they will be charged for using an overdraft.
"The First Direct deal is a corker as it offers both one of the biggest cash incentives we've seen for a long time, and is notoriously popular with customers wanting to be looked after."
Watch out for charges
After the first six months, 1st Account customers are charged a monthly £10 banking fee, unless they pay in £1,000 a month, or keep an average balance of more than £1,000. Additionally, people who hold some other products with First Direct can avoid the monthly charge.
Should you switch to the 1st Account and decide you're not happy with the service, First Direct is unique in offering you another £100 if you leave within a year of joining.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Where APR is the rate charged for money borrowed, Annual equivalent rate is how interest is calculated on money saved. The AER takes into account the frequency the product pays interest and how that interest compounds. So, if two savings products pay the same rate of interest but one pays interest more frequently, that account compounds the interest more frequently and will have a higher AER.
This is used to compare interest rates for borrowing. It is the total (or “gross”) interest you’ll pay over the life of a loan, including charges and fees. For credit cards where interest is charged at more frequent intervals, the APR includes a “compounding” effect (paying interest on interest). So for a credit card charging 2% interest a month (equating to 24% a year), the APR would actually be 26.82%.