Last Updated on 14th July 2020 by Tuppenny
How would you like to make money with your bank account?
Even if you don’t earn very much?
In this time of low interest rates and higher inflation you have to work a little harder to get your money to make money.
However there are ways to make money with your bank account if you are willing to read the small print and follow terms and conditions.
These days quite a few of the UK banks offer a lump sum bonus to transfer your existing bank account to them.
There are usually strings attached but follow the rules of their offer and you can make a few hundred pounds in a year.
Double that if you have a partner you help do the same.
I estimate that I probably spend a total of 1 hour per new account, spread over a number of weeks.
For a £125 bonus that’s the equivalent of being paid £125 per hour tax free!
At time of writing First Direct are offering £125 switching bonus via a link on Moneysavingexpert.com or £100 direct.
M&S Bank are also offering a £125 switch bonus in the form of a M&S pre-loaded credit card with additional £5 added each month if you continue to pay in £1000 per month (total of £185).
The most important thing to realize is, you don’t need to transfer your main bank account.
You know the one which you use for everything, all your bills and cash and mortgage?
These days to only have one bank account is increasing rare.
Many people set up bank accounts to serve different purposes such as a bill payment account and an account for your personal spends.
If you are in need of a more regular income then why not check out my post on the best flexible work at home jobs?
Preparing to make money with your bank account
To take advantage of these bonuses it pays to have a bank account you have designated for exactly this purpose.
Similar to a bill payment account, this is not your main current account.
It has a specific purpose.
Its primary purpose is for you to switch it to another account to gain the bonus that the bank is offering.
It could even be a 2nd account with the same bank you are already with.
Have it set up ready to go when a new bank announces a switch bonus.
Make sure if given the choice you request a debit card for this account.
Often when you apply to switch your account the new bank will ask for the debit card number of the existing account.
Keep a positive balance on this account, don’t incur overdraft charges as you are eating into the profits of your future bonus payment.
I also suggest when you know you are about to apply for a switch, pay in enough money to cover 2 months DD payments as a precautionary measure.
You won’t have any worries about checking balances and going overdrawn if you know you have those DD’s covered for 2 months.
Direct Debits (DDs)
If you are going to make money with your bank account then the next step is to get 2 direct debits set up.
Most switch bonus offers require direct debits to be transferred as part of the deal.
Direct debits can take a few weeks to put in place.
And I would play safe and have them pay from this special account for at least a month so you know they have been set up correctly by the company concerned.
Last thing you want is to go through a switch process only to fall foul of the terms and conditions of the new account because one of your DD companies cocked up.
That is a waste of a bonus.
It’s up to you which direct debits you use in this account. I would suggest using smaller costing ones just to keep things simpler.
I have pet insurance for 2 cats, that’s 2 separate policies, so one of these pays from my switching account and one from Mr2P’s.
Your mobile phone bill or monthly TV license bill are other low value direct debits you could use.
I wouldn’t advocate using your mortgage payment as one of your switching DD’s, there is always the niggle that something might go wrong.
It will get sorted as you are covered by the direct debit guarantee but you don’t need the stress or worry for the few days/weeks which it could take to resolve.
If I had a temporary problem with my pet insurance I wouldn’t lose any sleep, my mortgage would be a different matter.
Some people have advocated setting up direct debits to charities for £1-2.
These would work but personally I am not keen on this option.
It costs the charities money to administer a direct debit so you are costing the charity money by using this option.
Also it’s £1-2 you may not have otherwise given to that charity so it’s costing you money.
If you already have your charity giving sorted this can complicate matters.
Another option is your credit card/s.
I presume you already have these set to pay at least the minimum off each month, even better if you have it set to pay the balance off in full.
As long as you spend something on your credit card each month then the direct debit will be triggered.
The problem is if you don’t spend on the credit card then no direct debit will be paid.
If you are very good with your money you could have more than one credit card and follow this process for both thereby giving you the 2 direct debits.
But don’t go into debt by spending on your credit card and not paying off the balance, you’ll quickly wipe out the profit you are making from switching your account.
Bank account switching bonuses tend to be short lived so when one comes along you need to be ready to take advantage of the offer.
To make money with your bank account make sure you have:
- New specific bank account set up
- The debit card for this new account – no need to have used it
- 2 direct debits on the account that have already paid out at least once
- A balance of at least double the direct debits this stops you worrying if the switch ends up taking place close to the DD dates
What to do when a switching bonus offer comes along?
Terms & Conditions
The most important thing is to read the terms and conditions carefully.
I mean really read them.
And work out if you can fulfill these requirements.
If the new account requires 4 direct debits on your old account then you can’t fulfill the T&Cs with just 2.
Often there are a series of steps you need to take in order to comply with all the T&Cs.
Note these down on your calendar or somewhere that you will remember to check.
For instance one account I switched to required me to pay in £1500 within 30 days of the completion of my old account being switched over.
If I had paid the £1500 in before the switch completed or on day 31 I would not have got the bonus.
You must read the small print and follow it all.
New bank account requirements
There are usually a few similar requirements you need to meet in order fulfill the terms of any new bank account switch offer:
- Transfer an existing account to the new bank using the Current Account Switching Service.
- Have at least 2 live monthly direct debits on the old account which will transfer with your account
- Pay in X amount, either per month or as a one off.
Let’s break these requirements down a little further.
They aren’t always black and white and can mean more than what they say.
Transfer an existing account
This involves the closure of your old account so it is important that this old account of yours is not one you want to keep.
This is where the first step in this process comes in.
You have already set up a bank account primarily for this purpose so you don’t mind if this account is going to close.
Have at least 2 live monthly direct debits on the old account
Again if you have done your preparation your designated switch account already has 2 or 3 direct debits set up and running nicely.
These DDs will transfer across when you old account closes and will continue with your new account.
You don’t need to do anything about the DD’s, no need to contact the company the DD’s pays, this is all done for you by your new bank.
Pay in X amount per month
This requirement does not say that you need to earn this amount of money.
Nor does it say the amount to be paid in must be done in one go.
(Unless the terms & conditions of the new account say so – never seen it so far).
It is saying you need to pay in X amount of money each month.
It doesn’t even have to be your wages.
Often the minimum pay in is around £1000 but some can be higher.
For instance the HSBC Advance bank account requires a monthly payment of £1750 per month or £10,500 in 6 months.
£1750 per month as a net salary is £25,200 per year gross.
If you don’t earn £25,200 you might think you can’t apply for this account.
You just have to pay in £1750 a month.
That could be £1000 one day and £750 another day.
More importantly it could be the same money because you don’t have to leave the £1750 in the account.
You can bounce it straight back out again!
Given this is not your main bank account, you are likely to only have 2 or 3 direct debits on the account you have just transferred.
Therefore if your DDs are only £60 a month then you just need to ensure you have at least that amount left in the account to stop your DDs from bouncing (an absolute must).
This is where it pays to read the terms and conditions carefully.
Quick tip – I download the T&Cs so I can refer back to them over a couple of months to ensure I continue to tick all the boxes until the bonus is paid.
Make your application
Having read the T&Cs and confirming you will be able to meet them all then don’t delay in making your application.
Some offers get withdrawn very quickly.
In October 2017 Yorkshire/Clydesdale Bank offered the largest switch bonus seen in recent times.
It was for £250 for their B account.
It would seem they were overwhelmed by the response as the offer was withdrawn after a week or so.
But they honored the bonus to everyone who met the criteria.
Applying for a bank account can take just 10 minutes. Often the bank will confirm your identity through digital means.
Sometimes you have to upload a copy of your ID. This should be safe but always check the site you are uploading it to is secure.
The padlock or https should be showing in the menu bar.
Once you have made the application, keep an eye out for emails from the new bank welcoming you and ensure you take any action they ask of you.
You may need to register for online banking as one of the bonus requirements.
Do this straight away and you can monitor when the old account gets switched through.
Once you have online banking set up, you can pay in any lump sum as per the terms and conditions.
Quick tip – I always worry about making a payment to the wrong bank account by inputting the account number wrong.
Do a test deposit of a couple of pounds first from your main current account into the new account.
Check online to make sure it has arrived in your new account. Then make the rest of the lump sum payment. So much less stressful!
Having made the necessary lump sum into the account, you may want to draw most of it back out again, back to where it came from.
Again, test your faster payment process from your new bank account first with a payment of a couple of pounds.
Check it has gone through and transfer the rest.
You might want to leave £10 or so in the new account just because.
Logically speaking the T&Cs are what makes or breaks payment of the switch bonus.
I play safe by making it look like I am going to really use the account so leave a small balance.
Keep an eye on your online banking so you know when the switch of your old account has been completed.
You may need to make further lump sum payments each month or within a specific time-scale e.g. within 30 days of switch completing.
Make sure you adhere to these.
Switch bonuses can either pay very quickly or you have to wait a couple of months.
Make sure you adhere to all the T&Cs for this account.
Until. The. Bonus. Is. Paid.
Once the bonus money is safely in your new account you can do whatever you want.
Ideally you want to identify the next bank account offering a switch bonus and start the process all over again.
Bank account switch bonuses aren’t always available so you may need to keep this account ticking over until another bank announces a new bonus.
Keep the DD’s active for this reason.
If this new account requires you to pay in X amount every month as a condition of the account.
Then. Do. This.
You can withdraw the money the same day/hour.
Bonus payments are tax free and do not need to be declared to HMRC. If in any doubt check with HMRC via their helpline on 0300 200 3300.
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Your credit file
Applying for a new bank account will leave a credit search footprint on your file.
You need to have good credit, not great but good.
Too many applications in a short space of time will also impact your credit rating so space out your applications.
There aren’t usually loads of bonus offers on at the same time so you will naturally have them spaced out.
Unless banks go mad with their offers.
If you are intending to apply for a mortgage within 6 months I advise you to play safe.
Do not start applying to switch your account.
To get the best mortgage deals you need your credit file to be as squeaky clean as possible.
Applying for a new bank account will leave a credit search footprint on your file.
Wait until you have re-mortgaged to be safe.
Bank account switching bonuses tend to come around every few years.
If you miss the bonus for a particular bank this time, you can grab it next time.
I have made £650 so far switching accounts 4 times and I am fairly late to the party.
Other people have reported making over £1000 in switching bonuses.
That is £1000 of legitimate money that you have earned from the comfort of your home for the sake of reading the small print and following instructions to the letter.
You can earn this at 10pm after the kids have gone to bed or at 6am on a Saturday morning.
Why not make money with your bank account?
If you have a good credit report, aren’t intending to re-mortgage in a few months and are happy to jump through a few T&C loops then do it!
Open your special bank account today and get started on earning this free money!