The phrase ‘cash back’ may be rather Alan Partridge but it’s certainly popular in the current account and credit card markets.
First Direct broke the mould with their First Account, paying £100 to customers opening an account, and incredibly, a further £100 to anyone closing that account within 12 months.
Unfortunately the £100 opening offer no longer exists, but you’ll still be paid if you’ve got an account with First Direct and choose to leave.
The biggest news on the cash-back front is the launch of Alliance & Leicester’s new incentive on its Premier Current Account. Not only matching First Direct’s offer of £100 for new customers, the Premier Account offers a further £25 to you and the person who recommends the account if they’re already an A&L customer.
While these deals sound great it always pays to check the finer details. MoneyExpert.com gives the low-down on current accounts with tempting offers.
AER you kidding?
A lot has been written in recent months about current accounts starting to offer in-credit interest rates to compete with more traditional savings accounts. With the likes of Alliance & Leicester (Premier Direct) and HSBC (Bank Account Plus) offering 8.5% and 8% AER respectively that’s no surprise.
Sadly for those looking for a cake to both have and eat, A&L’s Premier Account offers a modest 1% AER for balances up to £2,500 and 0.1% from then on.
In terms of the overdraft facilities offered the account is certainly competitive. It offers to match your current overdraft limit up to £2,500 and has a typical annual percentage rate (ARP) of 0%. That, though, only lasts for 12 months after which you’ll start paying a fee for using the overdraft (50p a day capped at £5 per month). A year spent in the red then would eat up £60 of your £100 account opening reward.
Take what you can
With First Direct pulling their offer of £100, and Halfax’s Moneyback account closing some time ago, Alliance & Leicester are very much on their own in the cash back front. There are, though, one or two other cash incentives to look out for.
HSBC offer a ‘Go green’ option on all their current accounts, paying you £5 when you take up the scheme that limits the paper involved in everyday banking admin. It may not seem a great deal of cash but every little helps and you’ll be doing your bit for the environment.
What may be more attractive are the cash back plans available on car and home insurance policies attached to your HSBC current account as part of the packaged deal.
Package it up
Unfortunately, those perks don’t come for free – HSBC’s Current Account charges £12.95 a month. If you’re prepared to pay for your current account, though, and are organised enough to make the most of the benefits available then there are a number of packaged accounts that, while not offering hard cash, do offer some decent incentives.
The likes of the Bank of Scotland, with it’s Ultimate Reward Current Account, and Lloyds TSB with the Platinum Plus Current Account both offer an in-credit AER above 5% as well as various benefits such as AA road side assistance, travel insurance, and air miles.
Unfortunately benefits such as discounted car insurance and AA break down cover are trickier to make use of than £100 cash so you’ll have to make sure you’re ultra efficient to make the account worthwhile.
Click here to compare current accounts.