Why bank switching could be the easiest side hustle?
If you have been following me for a while you will know that I am a huge advocate of finding ways to make some extra cash with as little effort as possible and one of my all-time favourite ways to make money is called “bank switching”.
What is bank switching?
Bank switching is a method of moving your bank account from one provider to another through the Current Account Switch Service. This moves your current bank balance, any direct debits, and payment contacts to make switching banks easy.
However, despite this useful service, the banks know that most of us aren’t going to bother moving from the bank we’ve been with since our parents’ opened our first savings accounts decades ago. So most banks are now incentivising us to move to them by offering cash to do so!
We aren’t talking small sums either, the average bank switching offer tends to be worth around £175 nowadays which is quite a handsome sum to receive for moving banks, but is it enough to “up-end” your finances? Probably not - that’s where my bank switching tricks come into play.
How to switch without switching
It is a common misconception that you are only allowed 1 current account (aka your main bank account) in the UK, but you can actually have as many as you like - at the last count, I have EIGHT!
This is important, because you don’t need to switch your main current account (where you get your wages paid into, and where you pay your bills from) and can instead switch another current account.
This could be a spare current account you have from a while ago, or you could even open a new current account specifically to switch for the incentives.
What about the hurdles?
So having a current account that you want to switch across is sorted, but the banks aren’t silly - and they want to make you jump through a few hurdles to receive the bank switching bonuses.
The first hurdle is usually having active direct debits on the current account that you are switching to the new bank, which would be no problem on your main bank account but on a spare one, or a new one? In this instance you will need to set up direct debits on the account before you start the switch process.
This is where Switchy comes in and can help you get your bank switching bonuses quickly without any issues.
What is Switchy?
Switchy is a website that allows you to set up direct debits for £1 each which should be active on your account within 3 days, offering a cheap and fast service to allow you to get moving with your bank switching journey.
They use Stripe as the payment processor for the direct debits, which is a huge payment processing company so you know your data and payments are in good hands, and you can cancel them at any time.
You can also set up as many Switchy direct debits as you need, so if you need 3 like the recent Lloyds switching offer you can set up three separate direct debits for £1 each to satisfy the bank switching terms.
Be sure to check out Switchy here.
What other hurdles are there?
So that’s the direct debits sorted, which will allow you to move the account across to the new provider, but you may also need to pay in £X into the account which can seem daunting as it’s usually quite a hefty sum but generally for these offers if it says £1,000 it means total deposits not a one-off deposit of £1,000.
So you could pay in £1, withdraw it and pay it back in 1,000 times to meet the criteria if you really wanted as that will meet the necessary terms.
You may also need to make debit card payments which can be a pain if you aren’t planning to spend much in the coming weeks and don’t want to eat into your bonus too much. For this, you can largely use your new debit card to top up balances on other apps (think Revolut, Monzo, Trading 212, etc.)
This method allows you to retain the cash you are spending and should (usually) meet the requirements of the switching offer.
What bank switching offers are available right now in the UK?
Here is an up-to-date list of bank switching offers but right now you can get the following switching bonuses:
FirstDirect: Get £175 (+£45 cashback from TopCashback)
Lloyds Bank: Get £175
TSB: Get £100 (+ £100 in various cashback)
Co-Op Bank: Get £75 (+£75 cashback for ongoing usage)
Nationwide: Get £200 for existing customers
Should you switch banks for a switching bonus?
As mentioned above, I would probably steer away from switching your main banking provider for a switching bonus as (despite the great switching service guarantee) it can get messy.
I would certainly suggest looking at whether you can make cash from switching another bank account though, as it takes about 15 minutes to do the forms to switch and get things set up and you can make £100s every time!
The only impact of bank switching is a potential decrease in your credit score when applying for new credit accounts (some of these will do a credit check as part of the process) but this is generally temporary and shouldn’t impact your score massively.
However, if you are looking to get new credit (mortgage, car loan, credit card, personal loan) in the near future, it may be wise to hold off on your bank switching journey until after that is complete.
Please note that none of the above constitutes financial advice and you should always do your own research.
The above information contains a paid partnership.