Why are banks willing to pay you to switch bank accounts? I would rather have them reduce the fees they charge me.

My current account is with Santander. I heard they are offering £100 to switch acccounts. Too bad I can't switch.

Asked by Sally

1 Answer

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Answered by Darren Smith, IFA in Basingstoke, HAMPSHIRE
The reason is that bank accounts are a very "sticky" product, people seldom change banks even with £100 up for grabs as you have to get used to a whole new set of banking habits and rules etc.

also the average bank account application contains almost as much sensitive information as a mortgage and banks can use this data to cross sell other more profitable products to you such as their home insurance, personal loans, investments etc.

i have a client that was persuaded to pay £10pm for a premium bank account with all the frills even though she seldom drives so the breakdown cover wasnt worth much, was too old to be covered on the travel insurance, doesnt have a mobile phone so wont need to insure one, doesnt buy foreign currency as she holidays in the UK.... you get the drift. but what did she get in return? 5% on her account balance up to £2500 as long as she pays in £1000pm. her income is fine but she likes to keep a little more in the account so as she breaches the cash limit she actually earns 0.1% pa (same as before) but now pays £10pm for the privilege! | 01.19.11 @ 00:12
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$commenter.renderDisplayableName() — {comment} | 11.21.17 @ 10:18
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Answered by

Darren Smith
Darren Smith, IFA in Basingstoke, HAMPSHIRE