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Halifax £100 incentive to switch current accounts is back...again

Posted in 'Banking' by Ben Ryland

09 January 2013

Halifax has yet again re-launched its £100 incentive to attract new current account customers, coupling this with a deal not to pay any fees on planned overdrafts for 12 months for new customers.

Any new customer who moves over an existing overdraft will not pay any fees or interest on planned overdrafts and, as the average overdraft rate across the banking market is now at 19.65%, this incentive could prove very tempting for customers looking to tighten their financial belts after the Christmas splurge.

Halifax claims that customers who switch to this offer with a planned overdraft of £700 could save up to £137.55 in overdraft charges, and this could be even higher for customers suffering from any monthly overdraft levy applied their current overdraft facility.

Anthony Warrington of Halifax says, “We want to make our customers better off, and this initiative demonstrates that by switching to a Halifax current account you can not only earn £100 but you can save overdraft fees and charges too. Other switching offers generally only work for people who are in credit. However, this one will also be attractive for those moving an existing overdraft, as they will still get £100 but won't have to pay any overdraft fees for a year.”

The switching incentive offered by Halifax, which it says is paid in to your account on the same day, is now a necessary marketing tool to attract new customers and the addition of a fee-free overdraft deal should make it even more appealing. In practice, our Banking and Credit Card Survey makes it very clear that most consumers are reluctant to switch banks, even if the current level of service being obtained from their existing bank is absolutely dire.

But how does this offer from Halifax differ from the range of other current accounts, all competing for new custom?

First Direct – which has topped our surveys for many years as the provider of the best customer service on offer - also offers new customers £100 to switch current accounts but their accounts can only be accessed online or via telephone, and £1,500 needs to be deposited into the account each month. The First Direct deal is therefore much less accessible.

Santander – which languishes at the bottom of our surveys for customer satisfaction - is offering to pay interest on credit balances through their ‘123’ current accounts, offering 1% on balances between £1,000 and £2,000, 2% between £2,000 and £3,000, and 3% on balances between £3,000 and £20,000.

Therefore if you were to have an average balance of £15,000 in your account, after 12 months you can earn £456.24 gross in interest payments, minus the £24 fee charge, making this type of account reasonably appealing for those with large positive balances, and a reasonable competitor to some of the best savings account rates on offer.

With all these offers on the table, more and more people will want to switch their account, so the switching process needs to be clear and user-friendly for customers. Rules which take effect in September 2013, give banks a strict seven-day deadline to switch a customer's current account, and will have to cover the cost of any mistakes made in that process.

There will similarly be new guarantees put in place to ensure payments in and out of a customer's account do not go missing, when they transfer accounts to a different bank.

As a result, those wishing to switch their current account between banks should find it quick and more importantly a lot easier. It’s just a case of overcoming the lethargy and apathy that surrounds moving bank accounts. And if you are wondering how Halifax was rated in our recently published 2012 Banking and Credit Card Survey, they came a creditable third, behind First Direct and the Coop, and above the vast majority.

Ben Ryland is a Credit Analyst at Checkmyfile. He has a degree in International Business and Management from Aston University. He can be contacted at ben.ryland@checkmyfile.com

Ben Ryland

Ben has a degree in International Business and Management from Aston University. Prior to working for us, Ben spent a year working for an IT firm in France. He writes on a wide range of issues across all areas of credit and personal finance.

Ben is a Senior Credit Analyst at checkmyfile.

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