Best bank accounts: RBS follows Halifax and offers £100 bribe to open

Royal Bank of Scotland is offering £100 to customers who open a bank account.

The bribe comes just weeks after the bank was voted one of the worst current account providers. 

Out of 19 banks, RBS ranked 18th for overall service and bottom for its branches in the Competition and Markets Authority survey.

Royal Bank of Scotland is offering £100 to customers who open a bank account

Royal Bank of Scotland is offering £100 to customers who open a bank account

Royal Bank of Scotland is offering £100 to customers who open a bank account

The cash is available to new and existing customers until 19 November, but you must not have claimed a switching bonus since October 2017. 

You can choose between the bank’s free Select account or its £2-a-month Reward account. 

To qualify, customers must switch using the Current Account Switch Service, pay in at least £1,500 each month, and log into online or mobile banking before 30 December.

The taxpayer-owned bank followed a move from Halifax early last month, which relaunched the competition for current accounts six months after banks pulled switching offers and closed current accounts in response to the coronavirus pandemic.

But in a sign of how badly the economic fallout of the coronavirus has weighed on the margins of Britain’s biggest banks, the latest offer from RBS is £50 smaller than one it launched around this time last year and £75 less generous than one it launched in mid-February.

Halifax last year offered a welcome bonus which paid £135 in total to customers who switched, although only £85 was paid upfront. Its current offer is also £100.

However, beggars can’t be choosers and the move from RBS means banks are officially competing for customers for the first time in six months, when First Direct, HSBC, NatWest and RBS offered between £100 and £175 to prospective switchers.

‘We’re certainly seeing a bit of a revival in switching offers and introduce a friend incentives’, Andrew Hagger, the founder of personal finance site Moneycomms, said.

Banks shelved three-figure welcome bonuses and closing current accounts to new customers in late March to focus on the problems existing ones were having amid the coronavirus pandemic. This was followed by official switching figures which found the number of people moving bank accounts collapsed between April and June.

Will RBS win back customers?

While it has climbed out of the bank account basement in the eyes of its customers, there’s no doubt Royal Bank of Scotland has had a rough last few years.

Once one of the biggest banks in the world, the taxpayer-owned bank has lost a net 41,055 customers through the Current Account Switch Service since the start of 2019, despite offering three three-figure switch bonuses of up to £175 over that time.

At the same time, its stablemate NatWest, which has replaced RBS as the flagship bank of the group, gained a net 15,681 customers in the first three months of 2020 with its own £175 switch offer, which launched 12 days after RBS’s.

Perhaps this is due to the bank’s consistently poor reputation when it comes to its current account offering . In the latest round of rankings in August, decided upon by around 1,000 customers of each bank, RBS came 18/19 for overall service, 14/19 for mobile and online banking, and 17/19 for overdrafts.

Meanwhile Halifax, with which it is now competing for current account customers, came 6/19, 5/19 and 5/19 respectively. 

 What is the offer and how does it compare?

RBS’s offer is open to those who switch to its main Select bank account as well as its Reward account, which comes with a monthly fee and offers cashback among some other perks.

Its Reward account costs £2 a month and pays £4 a month cashback if a customer pays out two direct debits of £2 each, and another £1 if they log into mobile banking. Customers must pay in £1,250 a month.

Both accounts come with fewer hurdles than Halifax’s Reward or Ultimate Reward accounts, which are the only ones the bank is paying customers £100 to switch to. The offer ends on 15 September.

Halifax was the first bank in months to launch a new switch bonus at the start of August

Halifax was the first bank in months to launch a new switch bonus at the start of August

Halifax was the first bank in months to launch a new switch bonus at the start of August

Customers must pay in £1,500 a month or incur a £3 monthly fee, then to obtain one of a range of rewards, including £5 monthly cashback and two digital film rentals, they must spend £500 a month on their debit card or keep £5,000 in their account for a full month.

Its £17-a-month Ultimate Reward account offers those benefits plus a £50 fee-free overdraft buffer, breakdown cover, mobile phone insurance and travel insurance for trips of up to 45 days, which does not cover holiday cancellations resulting from the coronavirus.

Existing RBS customers can trade up to its Reward Silver, Platinum or Black accounts for £100 if they want a packaged account. 

RBS Reward Silver provides European travel insurance for up to 22 days, fee-free debit card purchases abroad, mobile phone insurance and discounted cinema tickets, for £10 a month.

Switching figures collapsed between March and April as banks pulled welcome bonuses

Switching figures collapsed between March and April as banks pulled welcome bonuses

Switching figures collapsed between March and April as banks pulled welcome bonuses

Its travel insurance also covers coronavirus-related cancellation, with some stipulations.

If savers wanted to match the £100 bonuses with the interest from a savings account, they would need to have £10,000 stashed away in the best easy-access account paying interest annually, offered by NS&I and paying 1 per cent.

Meanwhile, they would need just over £11,000 saved in the highest-paying cash Isa, offered by Cynergy Bank and paying 0.9 per cent.

Back in the world of bank accounts, Metro Bank and TSB offer some slightly less generous sign-up bonuses. 

Metro Bank offers newcomers £50 if they are referred by a friend, who also gets £50, provided they pay in £500 in each of the first two months from account opening, make 10 debit card purchases and register for online and mobile banking.

TSB meanwhile offers £50 for those who sign up to its Classic Plus account through cashback site Quidco. Those who sign up must pay in £500 in three of the first four calendar months after the account is opened, make two transactions, sign up for online banking and go paperless.

However, Andrew Hagger warned consumers ‘shouldn’t switch purely for the cash.’

He said: ‘Make sure the account works for you, check the overdraft rates, minimum monthly credit criteria, in-credit offers and the vicinity of your nearest branch, if you use one.’ 

Watch out for overdraft rates 

While customers who look to switch will often have their eyes on what they can gain from paying in money, it also pays to keep an eye on the cost of taking it out too.

With that in mind, switchers looking enviously at Halifax and Royal Bank of Scotland’s new £100 bonuses should beware the overdraft costs at both if they burn through that £100 and then the rest of their money.

While RBS dropped its temporarily overdraft rate to comply with Financial Conduct Authority rules designed to protect customers from new, higher overdraft charges, both banks are now back to charging close to 40 per cent for borrowing.

RBS charges 39.49 per cent, and Halifax 39.9 per cent by default, although some will pay as much as 49.9 per cent.

To borrow £500 for 10 days with RBS would cost £4.62, while with Halifax it would cost £4.60, according to figures calculated by Moneycomms’ Andrew Hagger.

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