How I Made £850 in a year by Switching Bank Accounts

This post was updated on the 20th of January 2021. Information given was correct on that date.

Free money for very little effort is one of the best kinds of money there is. Sure, you probably already have a job that pays the bills, and hopefully, you enjoy it too, but since most of us are already working all of the hours we are physically able, making more on the side without burning out becomes a little more tricky.

For those little things in life that cost a bit more, like holidays, home improvements, new cars, or for big savings goals like saving for a house, every extra penny made really counts.

Switching bank accounts is a really good way to get free money out of the banks, for very little effort at all. I’ve done it myself several times, and it really couldn’t be easier. In just under a year, I’ve made £850, and the whole process only took a few hours in total.

I’ve put this money towards my emergency fund, and I plan on repeating the process a few more times in the future to make even more.

So how can you make the most of these switching deals yourself, and how much could you make? Here’s the low down…

How does it work?

Switching bonuses were introduced because it was so common for people to just stick with the same current account for decades and never leave the first bank they joined.

It might sound like a lot of hassle to change all your payments, your salary and all your financial details, but the Switching Service actually takes care of everything for you, so that you don’t have to do anything yourself. 

All you have to do is provide the details of your old account, and your new bank will contact everybody on your behalf behind the scenes. They’ll switch over all of your payments, and close your old account automatically.

They will also forward any payments made to your old account to your new one, even after your old account is closed.

For you, the whole process only takes about ten minutes. Free money doesn’t come much easier!

How I made £850

Nationwide – £500

The first switching bonus I took advantage of was the Nationwide recommend a friend offer. This offer had been running for a while, and it was a really good one to go for as not only could you and the person who referred you both got £100 each, but you could recommend 5 friends in any tax year. That’s a potential £600 in the first year!

My boyfriend referred me initially, and then I referred four friends, so I made £500 from that Nationwide switch alone.

Unfortunately, since writing this post Nationwide have paused their recommend a friend scheme indefinitely. I hope to see it make a comeback in the future, as it was really lucrative.

Natwest £175

The next offer I took advantage of was a Natwest switching offer that offered £125. It also offered £50 for staying with them for a year and using my debit card once a month. I decided it was worth my while leaving it open for that, so I moved my Netflix payment to that account as that counts as a debit card payment.

Netflix and Spotify are both great payments to use if you find any offers that require you to use your debit card, as they are card payments rather than direct debits. And similarly, if a switching offer requires two direct debits, just know that unfortunately they won’t count.

I’ve received the £125, and the £50 for staying for the full year, making it £175 total.

HSBC – £75

Next, I set up a donor account (more on this below) and then opened a HSBC account to switch it to that was offering a £175 bonus.

Usually, as long as you transfer money in and out to make up the total amount they want, you’ll get the higher offer, but annoyingly the pay in criteria was to determine your eligibility for the account itself, rather than the bonus. My salary wasn’t high enough to qualify for the Advance account, but they did offer me a basic account with a £75 switching bonus instead.

Never the less, a free £75 for filling in two forms isn’t bad going, and it brought my switching bonus running total up to £750.

First Direct – £100

A few months later, I switched one of my donor accounts to First Direct, because they were offering £100. Once again, the process only took a few minutes, and the £100 was in my account within 2 months of applying.

Using donor accounts

I wanted to take advantage of more switching offers, but I didn’t want to close my Nationwide account. Not only do I plan on recommending as many people as I can until they end that offer, but I also opened a linked savings account when I first switched, which I needed an active account to keep.

So I opened a second basic Nationwide account to use as a ‘donor’ account to switch out. Most switching offers require you to move two direct debits, so I changed two of my direct debits to that account. Then I used that account for my next switching offer.

Donor accounts are a great way to make the most of more than one switching offer at a time, but be aware that every time you open a new bank account it will have a small impact on your credit rating.

What are the best deals?

Switching offers change all the time, and at the time of initially writing this post there were plenty to choose from. Unfortunately, early in 2020 most of the banks withdrew their switching offers, and as of January 2021 there is only one available.

Virgin Money

You can currently get 15 free bottles from Virgin Wines (which they value at £180) for switching, as well as 2.02% interest on up to £1,000. This is also one of the highest interest paying current accounts, so it’s worth switching to just to get the interest.

I usually keep an eye on the Money Saving Expert guide to the best bank accounts, which is kept up to date and always has the latest offers.

Always read the small print

When deciding which offers to go for, there are a few things to look out for in the terms and conditions of the offer. Every switching bonus will have slightly different terms and conditions. I recommend reading them in full, and then making a note of them somewhere for your records. 

Things to look out for include whether you need to switch active direct debits, and if so how many. Not all offers actually require this. Some don’t ask you to switch any at all, and others accept standing orders too.

Most offers require a minimum of two direct debits to be switched along with the account. This means that the direct debits need to be active on the account that you are switching from. The Switching Service will sort out switching them for you.

A lot of switching bonus offers require you to keep the account open for a certain amount of time, usually three months. If you switch accounts again before then, they might ask for the money back.

A lot of offers require you to pay in a minimum amount of money per month, in order to qualify for the bonus. If you earn less than the full amount, you can get around this by transferring money in and out of the account within a month, for example for a minimum pay in of £1000, you could transfer in £500, transfer it back out, and then in again the next day.

Do be careful though, as I was stung by HSBC when planning to do the above – they based the amount they expected me to pay in on my salary when opening the account. 

It’s not a good idea to lie about your salary when applying for financial products. Keeping your details consistent across applications is key to not being flagged for fraud.

Does it affect your credit rating?

The short answer is yes – applying for bank accounts does temporarily affect your credit rating, as does applying for any other financial product.

In the long term, switching bank accounts won’t hurt your credit rating, but it is important to know that it will probably take a temporary hit.

I closely monitored my credit rating for free using Experian, and when it dipped lower than I was comfortable with, I took a break from applying for any more accounts. Within three months my credit rating bounced back to where it was when I started.

It’s worth thinking about whether you are likely to need to apply for credit in the near future and planning accordingly. If you have any big purchases that you usually use credit for, or if you’re planning on applying for a mortgage soon, think about when you’re going to be doing so and make sure your credit rating has enough time to recover.

I hope this post has helped to clarify how these switching bonuses work to anyone who may have been wondering, and shown you how easy it is to take advantage to boost your savings.