Kroo Bank has warned that people risk shortchanging themselves by focusing on banks offering cash switching offers rather than consistent value.
In recent years, bank account switching has often been driven by cash switching offers, where account providers offer sums of £100 or more to new customers. This is borne out by the statistics published each quarter by the Pay.UK on behalf of the Current Account Switch Service, pinpointing the banks who have seen the largest inflows of customers, and who tend to have offered the biggest switching bonuses during the corresponding period.
However, in order to qualify for the switching bonus, customers often need to meet various terms and conditions, such as paying in a set amount each month, transferring direct debits or making a specific number of debit card payments. What’s more, the switching bonuses provide only a one-off benefit since they can only be claimed once per person, while the accounts themselves rarely pay in-credit interest*.
Analysis by Kroo Bank has highlighted the improved returns on offer if customers instead keep their money in a bank account paying a competitive rate of interest on in-credit balances.
Kroo Bank has recently increased the interest on offer to new customers on its Everyday current account to 3% AER / 2.96% gross (variable) - which includes a fixed bonus of 2% AER for the first 12 months - on balances of up to £500,000, with no monthly fees and no minimum deposit.
The account has no monthly fees or minimum deposit requirements, while customers can also benefit from fee-free debit card spending abroad.
Veronika Lovett, CEO of Kroo Bank, commented:
“Bank switching offers are understandably attractive, as they offer an immediate boost to your finances, and the quarterly Current Account Switch Service statistics show they have been effective at winning over customers. But once the bonus has been paid, you may find yourself with an account which offers little ongoing value, particularly if you tend to have a more significant balance in your bank account. If you want a more consistent return on your money, then accounts that provide competitive rates of interest on in-credit balance may be a better choice.
“It’s even possible to get the best of both worlds by utilising multiple bank accounts - one which you can move around to obtain switching bonuses, and then a second which you transfer your everyday money into, and which offers a regular return.
“At Kroo Bank, we believe people should get something back from the money they keep in their current accounts. By offering 3% interest to new customers, we're helping them earn a return on their everyday balances, whether they use Kroo as their main bank account or alongside another provider.”
