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?
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
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