Current accounts are renowned for their perks, which can include benefits such as insurance add-ons, but providers are now upping the ante by offering cash bonuses to entice new customers.

Since the launch of the Current Account Switch Guarantee in 2013, Moneyfacts.co.uk has seen a sharp rise in the number of cash incentives being offered with current accounts, with some deals boasting sums of up to £220 a year.

Indeed, the latest offers can provide customers with more cash upfront than what they could earn in a whole year of saving with a standard savings account. For example, the £150 gained when switching to Yorkshire Bank’s fee-free Current Account Direct could only be matched by a savings account paying an interest rate of 7.5% yearly on a £2,000 balance.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Current account providers are pulling out all the stops to grab the attention of new customers by rewarding switchers with a cash injection. Thanks to this competition, savers who are struggling to get a decent return with standard savings accounts may be more than interested in what these providers have to offer.

“Over 70,000 people switched their current account using the switch service in December*, and as a new year begins some consumers may find that they’re paying over the odds for their account or that they’re not making the most of any add-ons, so a quick switch could be in order. Competition between current account providers is therefore likely to continue this year, particularly as the Competition and Market Authority (CMA) is expected to give its final report on the retail banking market in April.

“However, while cash incentives shouldn’t be ignored, customers should choose a current account based on its overall package to ensure it covers all their financial requirements. This is particularly important if they want a reasonable overdraft to cover any unexpected outgoings, otherwise they could end up being stung with excessive fees.”

*Source: Bacs Payment Schemes Limited switching figures.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

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