Is it changing into tougher to change financial institution accounts for a money bonus?

Banks are making it more difficult for customers to win cash bonuses for switching their bank account.

In recent years lenders have paid switching bonuses of up to £200 to encourage new customers to sign up.

But banks have now introduced more switching requirements to deter ‘serial switchers’ from swapping accounts constantly just to earn money.

These include transferring two direct debits, making five or more debit card payments and opening an additional savings account.

The average number of requirements across all bank switching deals has doubled from 1.6 to 2.9 in one year, data from comparison website Finder shows.

Meanwhile the maximum number of requirements a bank can impose on customers switching for a cash bonus has risen to six compared to two just four years ago.

This marks a major change from four years ago, when almost all switching deals only asked customers to log into the banking app and deposit a certain amount, according to Finder.

Cash carrot crackdown: Banks have been making it more difficult to switch current acccounts

Finder analysed 86 bank switching deals on the market over the four-year period from 2020 to 2024. 

Why are banks making it more difficult to switch?

In an effort to keep customers as longer-term current account holders, rather than those who will collecting the cash and dash to the next bank which is offering a switching offer, banks have been imposing more restrictions.

Some of the extra requirements that have been introduced include transferring two or more direct debits, making five or more debit card payments and opening an additional savings account. 

Some savvy customers have been able to make upwards of £1,000 from bank hopping to collect switching bonuses.

Louise Bastock, money expert at Finder, said: ‘We’re in a new, stricter era for switching deals, with banks seemingly looking to put off “serial switchers” with additional rules, but they are still a great way to earn extra cash.’

Figures from the Current Account Switching Service (CASS) showed that between July and September 2023, when NatWest had a £200 switching deal, over 94,000 people flocked to the bank and they topped the net gains leaderboard for that quarter.

However, during the next three-month period, between October and December 2023), the bank lost over 50,000 customers to account switches, making up 54 per cent of the previous gains.

This gave them net losses of over 43,000, going from top to bottom of the leaderboard in just three months. 

During this same timeframe, Nationwide launched a £200 switching offer and gained more than 190,000 new customers.

TSB, for example, offered a restricted switching deal in August 2024 paying up to £190. 

The first £100 arrived in customers’ accounts as a cash payment and the rest came in cashback payments, with customers able to earn between £90 to £120 in cashback within the first year of the account being open.

To the get cashback, customers needed to complete the full switch and then make 20 payments of any value each month for the first six months the account was open using their debit card or Google or Apple pay.  

Data shows that more restrictions do deter potential switching customers.

More than three-quarters of people have never switched current account to get a switching bonus. Of these, 12 per cent said there were too many different requirements , while 14 per cent said the cash rewards were not worth the effort.

Banks offering less cash for switching

The amount of cash that banks are offering as a bribe to switch their current account has fluctuated over time.

For most of last year, the standard for most banks’ switching offers was £200. In recent months, the banks which have launched a switching deal pay £175.

Data from Finder reveals that in 2020, the average amount paid by banks as part of a switching incentive was £122. This jumped to £203 in 2021 before falling to £157 in 2022.

Throughout 2023, banks were paying an average of £194 for switching deals, dropping to £183 for the first half od 2024.

Bastock said: ‘Banks have been experimenting with how much they offer, given there is a high turnover of customers getting a switching deal and then leaving soon after.

‘This has included a reduction in the value of bonuses given out and adding extra criteria like using your debit card a certain amount of times or drip feeding the bonuses they give out if a customer remains for a certain period of time. This is to try and ensure new customers stay with them for longer.’