Money saving expert Martin Lewis has turned a spotlight on a banking war as household giants hand out large cash sums to tempt customers to switch.
He said four banks – Santander, First Direct, Lloyds and TSB – are now offering handouts of £175 each to get customers to switch to them with others expected to follow suit.
Separately, Nationwide is offering £200 to some existing customers if they switch accounts held with other financial institutions to the building society, for a total of £900 currently available to customers willing to bank hop.
Martin Lewis said the situation has allowed some savvy consumers to cash in to the tune of thousands of pounds by becoming super switchers – constantly swapping between banks in order to receive a payment.
And some are even setting up so-called ‘burner accounts’ that they can use as a tool to switch between banks in order to claim a windfall.
“So unless your current bank tickles your toes and keeps you happy, consider switching to make some cash.”
It added: “Switching’s usually quick and easy. The bank’s seven-working-day switch service will close your old account and auto-move your balance, standing orders & Direct Debits for you. After, any payments to your old account are auto-forwarded.”
The banks attempt to limit abuse of the cash handouts by making various smallprint demands around the accounts that are transferring. For example, they may ask for a minimum number of direct debits being assigned to the account each month, or minimum payments into the account each month.
Looking at the opportunity to make big money, the website said: “Done carefully, you can switch multiple times.
“Some even open ‘burner accounts’ just for switching. Full help, pros and cons in Make £100s or £1,000s switching banks. Many people do it, including some here in MSE Towers.”
It said these super switchers also use a second tactic, known as stoozing, which takes advantage of an introductory interest-free period offered by a credit-card company to borrow money for investment elsewhere.
One follower of the website, identified as Simon, said: “Over 12 months my wife and I undertook 10 bank switches, managed our spending through stoozing, and made sure we used cashback sites for purchases.
“Through these methods, we managed to amass £3,000 which we used to pay for a seven-day family holiday in Rome, which we loved.
“We managed this all through the help of MSE. Thank you MSE for paying for our holiday – we’d not have been able to go to Rome without your help.”