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

Find a more rewarding deal: Some accounts promise cashback, interest and freebies

The New Year brings with it a handful of new lucrative current account switcher offers – worth up to £175.

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. 

Find a more rewarding deal: Some accounts promise cashback, interest and freebies

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.  

HSBC Advance £175 cash to switchRequires a minimum £1,750 monthly deposit, must open an account and switch using the Current Account Switch Service within 30 days.
First Direct 1st Account  £100 cash to switch using the CASS. £250 interest-free overdraftTo earn the bonus you need to pay in £1,000 within 3 months. Pay in £1,000 a month or maintain a £1,000 balance or pay £10 per month.
Nationwide FlexDirect5 per cent interest on up to £2,500 and fee-free overdraft, both for the first year only thoughPay in £1,000 a month.
Halifax Reward
A £2 monthly bonus when you stay in credit. This is changing from 1 June.Pay in £750 a month, stay in credit and pay out two active direct debits
Tesco Bank Current Account 1 per cent on balances up to £3,000 and extra Clubcard points for spending on debit card£750 monthly deposit and 3 direct debits
Club Lloyds Pays 1 per cent on up to £4,000, and 2 per cent on £4,000 – £5,000£3 monthly fee or deposit £1,500 a month.
TSB Classic Plus 3 per cent on up to £1,500. Cut to 1.5% from 2 May.Pay in £500 a month. You must maintain two direct debits, register for internet banking, paperless statements and paperless correspondence. 
Santander 123
Santander will pay 1.5 per cent on balances up to £20,000 plus up to 3 per cent cashback on bills. This is changing on 5 May, read more below£5 a month fee. You must pay in £500 a month and maintain two active direct debits
Starling Bank current account 0.5 per cent interest on balances up to £2,000, and 0.25 per cent up to £85,000. Cut to 0.05% from 18 MaySmartphone only app

Best account for free cash…. HSBC

HSBC’s £175 cash switcher offer is back on the table, pushing it ahead of rivals for the biggest real cash switcher offer on the market (M&S Bank offers more but in two parts and as vouchers only to be spent in its stores or online).

If you want to get your hands on the cash you need to open its Advance Account and switch using the Current Account Switch Service within 30 days. Its no-frills Bank Account comes with a £75 cash bonus.

The Advance Account comes with a few customer perks including a regular saver paying 2.75 per cent – one of the highest on the market. 

It also offers an arranged overdraft of at least £1,000 when you open your account.

Watch out

There is no account fee but you must pay in a minimum if £1,750 per month or £10,500 over the course of 6 months. 

The arranged overdraft limit will be charged interest at 17.9 per cent EAR beyond a £10 free buffer. Currently there is a £5 daily charge for unarranged amounts. 

From March HSBC’s overdraft charges will change however, you will be charged a flat rate of 39.9 per cent EAR interest up to a maximum £20 per month. 

This is Money’s verdict:

The Advance Account is a fairly run-of-the-mill deal until you add on the £175 switcher offer, but the cash offer makes it well worth considering.

The loyalty regular saver, while not as lucrative as it once was, is well worth taking advantage of for anyone that switches too. Just make sure not to stray into your overdraft too often with this account. 

Best account for customer service… First Direct

First Direct recently beat off competition to reclaim its title as the bank most loved by its customers.

In a recent customer service survey it was awarded an 84 per cent satisfaction score, beating the likes of Monzo and Starling.

The bank is currently offering those who switch to it, a £100 cash bonus.

On top of the £100 cash to open an account it promises to pay any unsatisfied switcher £100 cash if they wish to switch to another bank after six months, but before you have been a customer for 12 months.

Another bonus is the £250 interest-free overdraft. After that, interest is charged at 15.9 per cent – still a fairly competitive rate – up to your agreed formal overdraft limit.

This is due to change next March however, when the bank is upping its interest on borrowing it a much higher 39.9 per cent. 

Watch out

You will need to credit the account with £1,000 in the first three months to be eligible for the £100 sweetener, and you will need to keep that up each month if you want to avoid the £10 monthly account fee.

This is Money verdict 

It doesn’t have any branches so if you are the sort of person who likes to do their banking face-to-face, this account may not be for you – although you will be able to use HSBC or Post Office counter services.

Also, if your balance is always firmly in credit, it may be a better option in the longer-term to find an interest-paying current account.

Remember the cash value may seem generous but you might be better off opting for it if you want to use it for something useful like helping to pay off your overdraft or move to a savings account.

Interest: Rates on specialist accounts beat most savings accounts

Interest: Rates on specialist accounts beat most savings accounts

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 5 per cent on balances up to £2,500 for the first year – not bad considering most 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 5 per cent interest deal ends after a year, when it drops to just 1 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. 

If you like to carry out your banking face-to-face, this account might not be good for you because you can only access internet or telephone services as a FlexDirect customer.

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.

Existing customers can boost their earnings by recommending Nationwide current accounts to their friends. For every person that switches on your recommendation you will both be rewarded with £100 in your account. 

Santander: offers the best current account for cashback

Santander: offers the best current account for cashback

Best account for interest on a large balance… Santander

Santander’s 123 account is not the generous deal it once was, however this could still be the best in-credit interest account for those with a large balance.

Interest on savings and cashback on bills

The 123 account will pay an AER of 1.5 per cent on up to £20,000 – earning a maximum yearly income of around £302. 

However the 1.5 per cent rate inches just above the best easy access savings accounts. 

Interest is clocked up on a daily basis and will depend on what you have in your account that day. 

It also pays tiered cashback on household bills.

You get 1 per cent back on water, Santander mortgage and council tax payments, 2 per cent on Santander insurance policies and gas and electricity and 3 per cent on mobile and home phone, broadband and TV packages. 

Both the interest and cashback you earn is paid directly back into your 123 account on a monthly basis.

Watch out

The £60 annual cost will negate some of the benefits of its cashback and interest payments. 

To be eligible for cashback services you must set up a minimum of two direct debits and pay in at least £500 every month.

This account is really not for you if you often find yourself in the red. Arranged overdrafts are charged at £1 a day below £2,000, £2 a day up to £2,999.99 and £3 over £3,000.

There are no fees for unauthorised borrowing.

What’s more, Santander is making quite big changes to the account on 5 May that may make it far less appealing. From then on, cashback will be capped at £15 a month, interest sliced by a third to 1 per cent, and its overdraft set at 39.9 per cent AER.

This is Money verdict 

In reality the cut to the 123 account interest rate a few years ago, combined with the monthly fee increase, means this is no longer the great deal it once was for many.

That said, for those with considerable savings, the 123 current account will remain a good deal despite the fee hike.

If there is any chance of you slipping into your overdraft, there is little point applying for the account as the combined charges and monthly fee are likely to cancel cash benefits. 

Santander says the average balance held in the account is £12,500, which equates to £126.25 profit – excluding cashback – even after fees have been taken in to account.

However those with a smaller balance may be best off switching to a free option.  

And finally…. 

Best account for your holidays… Starling

Starling Bank‘s current account is a decent all-round option, offering some interest on your balance, a cheap overdraft and best of all no fees for using your debit card abroad.

The only draw back for some might be that it is an app-only bank, however it comes with top customer service – coming second in a recent poll, only beaten by First Direct. 

Free use abroad and a cheap overdraft

Starling Bank offers fee-free spending and withdrawals anywhere in the world – a perk unavailable anywhere else.  

Rival challenger Monzo previously offered the same deal, but it has since added a cap on free overseas withdrawals of £200 per month, with a 3 per cent charge after that.  

The account with beefed up budgeting features. The app lets you categorise your spending, freeze your card temporarily if you lose it and set up savings goals. 

The interest paid on balances isn’t going to pulses racing but it’s better than nothing at 0.5 per cent on up to £2,000 and 0.25 per cent up to £85,000 

Watch out for   

If you stray into your overdraft there are no usage fees, but interest will be applied at 15 per cent EAR. That’s cheaper than most other banks out there, though this will change in April, with those with a low credit score paying up to 35 per cent.

If you use an unauthorised overdraft, there are no extra fees on top of standard interest and charges are capped at £2 per month.  

This is Money verdict 

Starling is a decent all-round option. Its overdraft is one of the cheapest, also appearing in our dedicated guide to the top accounts for those in the red.

It offers a simple low interest rate – less than half that charged by the likes of HSBC or Nationwide.   

Travellers often get tripped up when spending abroad, incurring hefty fees of up to 3 per cent every time they use their bank card in shops abroad or at an ATM which means this could be a real money saver long term. 

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