Could You Really Earn £220 by Switching Banks? What Savers Need to Know

Several UK banks are offering cash rewards to customers who switch current accounts, with standard switching bonuses ranging from £175 to £220. HSBC, Nationwide, NatWest, and Barclays are among them.

However, the upfront payment is only part of the potential gain. Savers could also benefit by moving money from an old account to one paying a higher interest rate.

The Cost of Bank Loyalty

Hargreaves Lansdown's survey of 3,000 adults found roughly two-thirds had been with the same bank for more than a decade, while 34% had moved their money in the previous year. Based on its analysis of Financial Conduct Authority data, HL estimates that staying put could be costing British savers around £12B in interest each year.

'Millions leave their cash with the same bank by default, and that inertia is worth a fortune to banks, while costing British savers billions of pounds a year,' said Simon Belsham, chief client officer at Hargreaves Lansdown. Among those who moved their savings, 87% said they did so for a better interest rate.

The Interest Could Be Worth More

A switching bonus is a one-off payment, whereas a higher savings rate can boost returns for as long as the rate remains competitive. According to Hargreaves Lansdown, instant-access savings rates at Lloyds, Barclays, NatWest, and HSBC averaged just 0.95% in its August 2026 comparison. Rates on Hargreaves Lansdown's savings platform were up to four times higher.

At 1%, £10,000 would earn £100 over a year. At 3.82%, it would earn £382 before tax, assuming the rate remained unchanged. For £20,000, a 0.9% rate would generate £180 a year, compared with £800 at 4%, a £620 difference. Savings rates can change, so savers should check the latest rates and account terms before moving their money.

The Bonus Isn't Everything

Sarah Coles, head of personal finance at AJ Bell, said people are 'incredibly loyal' to their banks, meaning rival providers need to offer incentives to persuade them to switch. She said the bonus should be the 'cherry on top' rather than the main reason to move. 'It's worth it for the banks, because they then have a captive audience, who are more likely to take other products from them,' she said.

She also advised customers to look beyond the bonus, considering the bank's reputation for service, overdraft charges, and the savings rate it offers. The £220 offer may be tempting, but customers should consider the account as a whole.

What to Check Before Switching

Many switching deals come with conditions, such as paying in a minimum amount or setting up a minimum number of direct debits. Switching banks will show up on a credit report, while opening several accounts in quick succession could affect the record. 'If you're planning to apply for a loan or mortgage in the next 12 months, you may want to wait until the deal is done,' says Coles.

The free Current Account Switch Service (CASS) transfers the balance and regular payments, with customers required to allow seven working days for the switch. More than 50 UK banks and building societies are signed up. The old account is then closed, while the switch guarantee protects customers against interest and charges caused by any problems during the switch. Recurring card payments, such as subscriptions, are not automatically transferred and may need to be updated manually.