Banks reduce their switching offers (except for students)
The majority of the UK’s retail banks have reduced or completely cut their switching offers to entice users to move their current accounts, with only students now being offered switching bonuses.
Only one bank, digital bank First Direct continues to maintain its long-standing £50 to switch offer to everyone, with M&S also offering £100 in vouchers and Nationwide offering £100 but only to those invited by current customers of the building society with the referrer also receiving £100.
The previous lucrative offers of upwards of £100 to switch to the likes of Clydesdale and Yorkshire Bank and HSBC no longer available, with banks apparently deciding that the summer season is an unprofitable time to poach customers from rivals, a theory supported by last year’s stats from Bacs, which runs the current account switching service.
Making it easier to switch banks was the reason behind the creation of the £750m Current Account Switch Service in September 2013, and over the last six years more than 5m people have used the service to change banking provider and shift over all their direct debits and standing orders.
Luckily for students, banks are still very much interested in signing up young people before they head off to university, offering thousands of pounds in interest-free overdrafts alongside a wealth of other offers from free young person’s railcards to discounted Spotify subscriptions, to discounts at high street restaurants. For decades it has been true to say that once people leave university with a current account, few ever would move provider due to the hassles of updating all their direct debits, standing orders, and more. However, with the Current Account Switch Service already used by millions, it is unlikely that the theory will hold true in the future and banks may start to reduce their offers for students as well.
Switching offers and free sign-up bonuses are a popular way for many companies to attract new customers, from streaming platforms like Netflix offering a free month to signup, to phone networks offering free Spotify with their monthly plans. Every company hopes that after signing up, their customers will stay loyal to them for years to come, but the ease of switching and opening new accounts over the internet means that customer loyalty is already on the decline.
Photograph by Low Jianwei