Best current accounts: Top five bank accounts for switching with rewards

Switching is something many of us put off, with a third of customers sticking with the same old bank we opened our first account with, despite bad service, hefty fees and little reward for our loyalty. 

But moving to a better deal could help get your finances back on track in 2020. 

Switching is easy, meaning there is no excuse for staying put. You can find out our favourite accounts and how to switch hassle-fee below. 

The coronavirus means not all banks are not in the business of trying to attract new customers with bumper switch bonuses, and many have cut their in-credit interest too. 

But from the start of August banks began to bring back welcome bonuses, as the competition for current account customers looks to be resuming.

Alternatively you can click through to read our in depth guides to the best banks according to how you use your account:

We have also compiled an easy to read table of the best accounts across the board.  

Best account for in-credit interest… Nationwide

There are a few banks offering in-credit interest. Some offers come without a time limit or interest on larger balances so which deal is best for you will depend on individual circumstances, but Nationwide is offering the highest available interest rate on a current account. 

Nationwide’s FlexDirect account pays out 2 per cent on balances up to £1,500 for the first year – not bad considering easy-access savings rates have slid in recent years. 

You must pay in a minimum monthly income of £1,000. On the last day of every month Nationwide will calculate the interest you’ve earned each day and then pay you this interest on the first day of the next month. 

Accountholders are also eligible for a 0 per cent overdraft for the first 12 months, after that you pay a whopping 39.9 per cent, so make sure you are back in the black before then. 

Watch out

If your income drops and you can’t pay in £1,000, you won’t receive any interest that month.

The 2 per cent interest deal ends after a year, when it drops to just 0.25 per cent. So it may be worth looking elsewhere after the 12 months for a better return on your money.

You get an interest-free arranged overdraft for that 12 months, but after that overdraft fees are hefty.

Recent changes to its overdrafts mean customers will now pay a flat rate of 39.9 per cent interest when overdrawn, this will be costly for those who regularly stray into the red. 

This is Money verdict

Accounts that are good for both in-credit and overdrawn customers are few and far between so this could be a good bet for those who have smaller balances – but can afford to pay in £1,000 each month, while the account still offers those benefits. 

Best account for cash… Halifax 

Halifax has become the first bank in months to launch a cash switching bonus, and offers £100 to those who open either its Reward or Ultimate Reward current accounts.

There are no catches on the £100 offer, applicants who haven’t earned cashback from Halifax since April 2018 must simply switch through the Current Account Switch Service and they will receive the money upfront. 

Halifax also pays customers £5 a month as a reward, although other options including digital magazine subscriptions or cinema tickets are also available.

Watch out

Halifax’s Reward account comes with several hurdles customers need to clear in order to earn that £5 a month cashback. 

The account comes with a monthly fee of £3 unless customers pay in £1,500 a month, then to earn the £5 they must either spend £500 a month on their debit card, or keep £5,000 in their month for a full month.

Overdrafts are also at a standard rate of 39.9 per cent APR, while the cost of borrowing could potentially be as high as 49.9 per cent APR, the most expensive on the market. 

This is Money verdict

Halifax’s switching offer is a welcome sign after banks pulled three-figure welcome bonuses throughout March and April as a result of the coronavirus crisis. 

Cashback and reward accounts have been cut over the last few years, and Halifax’s account is no exception. It used to pay out £2 a month with far fewer catches, and those who incur the £3 fee won’t see any benefit from the monthly reward being upped to £5. 

But with no other cash incentives around right now, it’s almost certainly worth opening the account solely for the £100 upfront welcome bonus, even if you end up closing the account afterwards.

Best account for interest on a large balance… Lloyds

With cuts to Santander’s 123 account on 5 May and again on 3 August, Lloyds Bank’s Club Lloyds account is now probably a better offer, although the 123 account still offers up to 3 per cent cashback.

Club Lloyds pays 1 per cent on interest on balances of up to £3,999, while those with sums of between £4,000 and £5,000 will earn 2 per cent on that balance. This works out at £60 interest if customers kept in the full £5,000 for a year, an interest rate of around 1.2 per cent. 

Overdrafts are charged at 29.9 per cent after a £50 interest-free buffer.

There is no monthly fee if you pay in £1,500 a month, otherwise it charges £3.

However, this blended rate is being cut from 1.2 per cent to around 0.8 per cent in October, with the rate on balances of up to £3,999 cut to 0.6 per cent and the rate on bigger balances cut from 2 per cent to 1.5 per cent.  

This is Money verdict 

Cuts to current account interest mean the blended rate of around 1.2 per cent you can get from Club Lloyds on £5,000 is the best rate you can get on balances above £1,500.

The rate itself is slightly better than the best easy-access rate around at the moment, meaning you’d only earn a little less if you wanted to stash it elsewhere. But if you have more than £5,000 burning a hole in your pocket, you should earn a slightly worse rate with another savings bank elsewhere.