TSB ramps up battle for current account customers
The battle to win over current account customers has been ramped up as TSB is now offering £125 to people to switch to it.
The cash offer, which runs until November 2, is available to customers who open its Classic Plus account through the MoneySupermarket or Money Saving Expert websites and switch to TSB using the seven-day current account switching service.
The Classic Plus account already offers 5% interest on balances up to £2,000 and a new perk launched in September also means that customers also earn 5% cashback on the first £100 of contactless debit card purchases they make each month.
In order to receive the £125 for switching, customers will also need to register a minimum of two active direct debits and credit a minimum of £500 into their new account within 28 days of the switch being completed.
Customers must have switched by November 23 using the switching service and TSB will pay customers 28 days after the switch completes.
The terms of the account also mean that customers must also register for internet banking and opt for "paperless" bank statements and correspondence.
Launched in 2013 across banks and building societies, the current account switching scheme automatically moves over incoming and outgoing payments to the new account and also closes the customer's old current account.
Since then, there have been signs of current account providers ramping up competition in a bid to woo new customers and keep existing ones, with an array of deals offering cashback and rates of interest on balances which will often beat that seen on savings accounts.
On Monday, NatWest and RBS will launch a new current account paying customers 3% back on household bills, which will come with a fee of £3 a month.
In September, Tesco Bank removed a £5 monthly fee that it previously charged to current account customers depositing less than £750 a month.
The change means anyone with a Tesco Bank current account will earn 3% interest on credit balances up to £3,000, without having to pay a monthly fee.
Meanwhile, Santander - whose innovative 123 account has been particularly popular in the current account switching battle - recently said that the annual cost for its account will shoot up from £24 to £60 from January. The 123 account pays up to 3% interest on balances of up to £20,000, as well as cashback on household bills.
Some experts have suggested that other current account providers may see Santander's move as an opportunity to win over people who might be considering switching elsewhere.
Rachel Springall, a spokeswoman for financial website Moneyfacts, said that while some current account providers have been putting their fees up, there have been signs of newer, challenger banks reacting by ditching fees and offering new perks.
She said: "It shows how quickly they can react."