More than 118,000 bank users switched accounts in October through the official service – a new record.
They are attracted by large cash rewards of up to £200, paid out within days. Some banks are so overwhelmed with new customers that they have been forced to withdraw the incentives altogether.
Cash to move your account offers have been around for years, but the stakes have increased in 2022.
Rich rewards: Cash incentives for switching bank accounts have been around for years, but the stakes have increased in 2022
Until last week, the Nationwide Building Society was offering £200 to use the Current Account Switching Service (CASS) to join a rival – its biggest ever incentive.
HSBC still has a switch offer of £200. Other top deals include £175 from Halifax and First Direct.
Experts say the rise in customers switching accounts is partly due to the cost of living crisis, which has left many families looking for simple ways to boost their budgets.
Some money changers say they have taken advantage of cash offers to buy Christmas gifts.
Tom Riley, Director of National Retail, explains that the big incentive was launched in early October 2022 to attract a new wave of switches that might not have been tempted before.
The higher amount worked better than the building society expected.
“The big £200 carrot was put together in the hopes of tipping newbies into switching. This is our most successful checking account incentive campaign to date.
“People are money conscious right now and they’ve taken advantage of it,” he says.
In addition to the bigger rewards on offer, customers are promised faster bonus payouts. Mr Riley says those who have switched to CASS now receive payment within ten days if they meet the required criteria – two direct debits from the account.
C ASS was launched at the end of 2013. It allows customers to easily change their current account online, with the guarantee that in the event of a problem, they will be compensated.
October 2022 was the biggest month ever for Switches. Nationwide was the biggest winner since CASS started by a considerable distance.
According to data from comparison website MoneyComms, Nationwide added a net total of 679,476 customers through CASS. This is the difference between incoming and outgoing.
Nationwide’s previous record three-month period was between January and March 2019, when almost 40,000 people moved.
He confirmed that the figure for October and December this year will be “significantly higher”, thanks to his offer of £200. This means Nationwide will have paid over £5million in cash to the Switches.
Its total net number of switches is double that of its closest rival, Santander, which had a net stake of 329,901 of its rivals using CASS.
Andrew Hagger, Founder of MoneyComms, says, “A lot of the changes are due to the incentives on offer. Cash kickbacks make a difference and can significantly alter the quarterly figure.
“There’s also a lot of churn – suggesting that there are switches sticking around for the medium to long term, but many jumping ship for the next cash installment.”
Other big winners include challenger banks only for Starling and Monzo apps.
Neither offer change bonuses and have only been on the list since 2018. But despite that, they had 171,728 and 154,343 changes respectively.
Best deals: Until last week, the Nationwide Building Society was offering £200 to use the current account switching service. HSBC still has a switch offer of £200. Halifax and NatWest offer £175
The other two banks that gained more new customers than they lost with CASS are Halifax and HSBC.
HSBC – whose figures include stable mate First Direct – is offering £200 to change.
To be eligible, you must set up two direct debits or standing orders and pay £1,500 per month into the account.
The High Street giant, which faced fury last week for cutting a further 114 branches – which will reduce its network to just 327 – said it would pay within 20 days.
First Direct is offering £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 driven up premiums, according to Andrew Hagger.
“A few years ago, suppliers discovered that a £100 cash bribe was enough to entice customers to switch – but it won’t reduce it now.
“Most of the recent incentives are now in the £175-200 range as suppliers are increasingly desperate to win new business from competitors,” he says.
Josie Dom decided to switch to NatWest after noticing it was offering a £175 welcome bonus.
The 52-year-old children’s author from Colchester, Essex, had bet on Halifax but was disappointed when it stopped offering a £3 monthly reward to stay 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 offer welcome bonuses, why wouldn’t you change?”
Catherine McKernan was one of thousands of people who were persuaded to switch their account to Nationwide because of her £200 switch offer.
The marketing manager from County Tyrone, Northern Ireland, had worked for 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 it changed for the first time in early November.
Catherine, 29, says: “The incentive was the biggest motivator for me.
The big losers in the CASS battle are NatWest/RBS and Barclays. NatWest and RBS lost 512,473 net customers to competitors.
And every quarter since the launch of CASS, Barclays has lost a net number of customers. Since the start of 2014, it has lost 502,755 net customers.
According to Money Mail analysis of 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, said: “As the cost of living rises, people are increasingly looking for a current account that suits them best. .providing a positive online and offline experience as well as quality Customer Service.
“It continues to lead many people to consider different vendors.”
CASS says that in the last three months of data it has, 99.3% of changes were made within its seven-day window.
The surge in Switches in October comes after a lull in July, when a total of just 57,204 people moved accounts using CASS. Fewer incentives for change were offered.
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