Clydesdale Bank and Yorkshire Bank have become the latest current account providers to offer large cash incentives to tempt consumers to switch their allegiances.

The two brands, both owned by National Australia Bank, are offering new customers a one-off payment of £150 when they move banks using a free switching service that closes their old account in the process.

This represents the largest cash reward for switching on offer in the market, ahead of the £125 payment offered by First Direct, part of HSBC.

To qualify for the payment, new customers of Clydesdale and Yorkshire must pay in a minimum of £1,000 each month. Customers switching between the two, and existing customers who pay in this amount, do not qualify. The offer closes at the end of February.

Banks and building societies have introduced a range of incentives to attract new customers following the launch of the government-backed current account switch service last September, which makes changing providers easier and quicker.

Among those offering cash rewards are the Co-operative Bank and Halifax, which both offer a switching bonus of £100. The latter also pays £5 each month to account holders who stay in credit and pay in £750.

Interest rates on balances have been another feature of competition between current account providers, in contrast to very low cash savings rates.

While the likes of Nationwide and TSB offer 5 per cent annual interest on balances up to £2,500 and £2,000 respectively, Santander extends a rate of 3 per cent on balances of up to £20,000 to customers of its 123 account.

Figures from the Payments Council showed that in the year following the introduction of the switching service, 19 per cent more consumers changed providers.

Halifax and Santander gained the most new customers, while Barclays and the Royal Bank of Scotland group, which was this week fined over IT failures, lost the largest number of account holders, according to the Payment Council figures.

Get alerts on Savings when a new story is published

Copyright The Financial Times Limited 2019. All rights reserved.
Reuse this content (opens in new window)

Follow the topics in this article