Last updated – 02/02/2023- Some links may be ads, referrals or affiliates but this article is completely independent and free of bias.
If you are a bit unsure generally about switching your bank account, then read on as I explain in a bit more detail.
Did you know that banks will pay you to switch to them? And did you know that not only will they pay you, but after you’ve applied for an account with them they will sort everything out with your old bank? And, did you know it doesn’t even need to be your main bank account?
Why would I switch my bank account?
The best reason is because it is the easiest side hustle ever – I am willing for somebody to fight me on this! The only easier side hustle in recent times was energy switching but even then the rewards were usually limited.
How long does the switching process take?
The switching services typically takes just seven working days.
The better news – after applying for the new account and giving them your old account details, you don’t have to do anything at all!
Where do I start?
The offers change quite regularly but the best place to see the latest bonuses is MoneySavingExpert .
If you want to switch a 2nd bank account (which I recommend doing) and don’t have one, then Monzo is a good place to start – you get £5 for free if you click that link, and then you can switch away from it to the next best bank account.
You can of course switch your main bank account, but you don’t need to.
Who should I switch to first?
This depends on you – each bank has their own criteria and it depends on your situation. For example, almost always if you are already a customer of a bank, you can’t get a bonus for switching to them. However, this isn’t always the case as I recently switched an old 2nd account into my existing Lloyds account and got a bonus!
You need to check expiry dates of bonuses (if there isn’t one – this doesn’t mean it won’t expire soon), the amounts of bonuses, the ease of getting the bonus
Assuming you have a completely clean slate, the most logical first switch (at the time of writing – check MSE for updates) from Monzo would be First Direct.
This switch has no minimum pay-in and doesn’t’ even require direct debits, so whilst this first switch takes place you can get direct debits set up in the meantime. Even if you set them up with old details, they will automatically switch over – they can typically take a few weeks to become active so the sooner you start this, the better.
It is up to you to decide the order in which you switch – firstly, check which accounts you are
How do I set up direct debits?
Most (but not all) switching bonuses are only paid if you switch a bank account with two active direct debits. An active direct debit is one that has paid out in the last 13 months.
. Note that a direct debit is different to a standing order or a recurring card payment – you cannot setup a direct debit yourself with the bank, it will always be done via the third party and it gives them permission to take money on a recurring basis.
The best thing to do is to switch over some of your existing direct debits to the new account – however, this has the added stress of making sure you have enough money to cover that bill. Worth it for some, but as I switch a 2nd account I personally prefer to have one Paypal direct debit and one charity direct debit (£1 monthly – this does exceed what they will be charged for having a direct debit)
I used to have a 1p direct debit set up for the T**y party, but unfortunately they now have a minimum, so I cannot have some personal joy by costing them approximately 34p a month!
Setting up a direct debit with PayPal is easy – you can add money to your PayPal account or just pay for something with a connected bank account – I recommend just sending £1 to a partner or family member (make sure they send it back!) – this is an easy workaround.
For the 2nd direct debit, choose a charity you want to support and set up a monthly direct debit for ASAP of £1 or £2 (obviously you can donate more – this is just setting out what is required) – remember, the first payments needs to be taken for it to be an active direct debit.
Andy Clever Cash has a fantastic guide here if you want to understand more.
What if I earn less than the minimum pay-in?
Don’t worry about that at all – the minimum pay-in won’t need to be in one go and doesn’t need to be salary. I have been switching bank accounts for around 12 years now and I always satisfy minimum pay-ins by just transferring the money each month.
If the minimum pay-in is £1,500, then I might just do 3 x £500 between accounts for example.
When is the bonus paid?
This varies from bank to bank –
If the money is so easy, why doesn’t everybody switch?
I believe there are various reasons for this.
Firstly, I think people don’t understand both just how easy and how lucrative it is. There is no hassle at all as the banks do everything for you, and you can make hundreds of pounds. Assuming you can get your partner on board too, that doubles your potential earnings between you (and slightly more – for example at the time of writing Co-Op bank actually have a referral scheme)
Secondly, people are very scared of harming their credit score.
(This isnt financial advice – this is just my opinion) What people don’t realise is that ultimately, your credit score doesn’t matter. The score itself is never actually seen by lenders.
Applying for multiple accounts can affect your credit score. However, unless you expect to apply for a mortgage in the next few months (and if this is the case, I would personally avoid any credit applications – even a phone contract), there is no reason to forgo hundreds of pounds on the off chance that an artificial score may be a few points higher.
I was a first time buyer in 2020 with (interest-free, though this is irrelevant to a mortgage lender) credit card debt, and me and my wife have been approved for a 2nd mortgage in less than a week despite us having switched lots in the last 2 years and having an even higher amount of (interest-free) credit card debt.
In fact, if your credit score is very dear to you, then all the more reason to use a 2nd account to switch so you can keep your long relationship with your primary bank.
Thirdly, people are loyal to their main bank and worry about bad service from other banks. There is no need to worry – you aren’t switching to these banks because you need fantastic service. You are switching because you want to take the free money from them.
How many times can I switch?
You can switch as often as you want – the only limit is set by the hoops you have to jump through.
Don’t worry if you run out of switching bonuses though – at this point, I would be looking at an account that gives me the most benefits, and new switching offers will come up all the time, even for those banks you have already switched to.
If you have used up all the switches, just keep an eye out for new ones, and old ones that will let you switch again.
Can I switch from any bank?
No – almost all banks take part in the service though – check CASS for details – they also offer further guidance and information on the switching process itself.
What if something goes wrong?
Its very unlikely, but it can happen. For example, when I switched away from Metro Bank a few months ago, during the process they failed to switch my Metro Bank account.
The resolution was simple – as soon as I found this out I rang the bank, explained that they needed to close my account and I also raised an official complaint to seek compensation.
They closed my account, and they also sent me a cheque for £50 – if you ever have an issue where a bank fails to follow its due process or, even more helpfully, where you can quantify a direct loss to you
Are switching bonuses taxable?
This is dependent on your personal situation and there is no black and white answer.
If you have multiple sources of income from various side hustles, especially if the total would exceed £1,000 in any given tax year, then you might want to read this guide from HMRC.
In case of any uncertainty, seek professional advice.
Can I switch my graduate or student account?
Any current account can be switched, subject to everything written above.
Can I switch a joint account?
You can switch a sole account to a joint account, but not vice versa.
Can I switch my savings account?
There’s no specific switching service for savings account, but assuming you have no restrictions, don’t hesitate to move your savings!
As interest rates keep rising, and this trend doesn’t look set to stop anytime soon, now is a fantastic time to make sure you are getting the best rate on your saving – check MSE here.
Note that if you have a regular savings account linked to your current account, you may lose this when you move. However, this shouldn’t stop you – just compare it to what else is out there on the market.
Will my recurring card payments also be switched?
No they won’t – these are linked to your debit card (which you will lose) – so you will need to give any new card details to the relevant service providers.
This won’t be something you need to do if switching a ‘burner’ 2nd account.
Why are so many banks stopping people doing it more than once?
Ultimately offering a switching bonus is a commercial decision from the bank.
There has been pressure on banks to do more to help customers switch banks. I would say most banks ultimately allow customers to switch back again, but there is never any obligation for a bank to do so, or offer a switching bonus in the first place.
If you have any questions or comments, please don’t hesitate to contact me on Instagram – I would also appreciate if you shared this article far and wide!
Update 02/02/2033 – Co-Op bank refer-a-friend offer has now ended – moved to bottom and left for reference
Follow this link to find out more details. In order to avoid paying a monthly account fee and having to go into branch, the Current Account (this is the name of the specific account) is the best one to apply for. Once you have followed the steps, opened an account and completed a full switch, message me on Instagram and I will give you the details you need for the form to get your bonus!
The benefit of this offer is that it seems as if there is no requirement to switch direct debits – this means you should be able to switch an old 2nd account and still get the bonus.
Note that as soon as the account is open, you can refer friends, even if the full switch hasn’t taken place.