How does being paid by your bank sound? Open the right account and you can receive money back every time you pay certain bills or just for having your account! Plus, take a look at how much I earn each month from just a few minutes work.
Now, before we get into the nitty-gritty I need to explain that I have had to rewrite this post several times.
Unfortunately, banks keep changing their offers and they all seem to be getting progressively worse. But, you can still earn a bit of extra cash without too much effort.
Loyalty doesn’t seem to count for much nowadays, so having the same bank account for 30+ years doesn’t often benefit you.
That’s why I decided to switch away from Lloyds (or LloydsTSB as it was then) almost 9 years ago. I didn’t have to change the way I bank and swapping accounts took me 15 minutes and it has earned me well over £1000 since.
Santander 123 Account
The biggest potential earner is the Santander 123 account which gives you cashback every time you pay a household bill by direct debit.
They pay out the following:
1% council tax, water, and Santander mortgage payments.
2% gas and electricity and Santander home insurance
3% phone, mobile, broadband, and TV.
How much does that equate to in real terms?
Let’s say you paid the following each month:
Council Tax £140
Gas and Electricity £80
Broadband and phone £30
In total, you would receive £5.77 back per month. You also receive interest on any credit balance, although Santander recently reduced their interest to 1% on this account. Still competitive compared to most other current accounts, you would probably be better off looking at investing in an ISA. Unfortunately, the 123 account comes with a monthly £5 fee which wipes out most of the money you would earn when it comes to cashback.
There is an alternative. Santander also offers a 123 Lite account. This offers all the same benefits but you don’t receive any interest. To counter that though, the fee reduces to just £1 per month.
Of course, the more you spend, the more you get back. It is worth noting, that in May 2020, Santander capped the amount of cashback you receive to £5 per month for each cashback tier. For example, you can now only get £5 back even if you spend over £200 on your mobile, broadband and TV. That means the most you can ever earn back is £15 per month.
Still, using the figures above, having the 123 Lite account will earn you £5.77 each month or £69.20 a year. Minus the fee, you will be £57.20 better off each year with no effort. Of course, if you have a mortgage and home insurance with Santander you’ll be quids in!
Natwest MyRewards Account
Until recently, Natwest offered a similar account to Santander which gave you back 2% on all your bills. Now, they will pay you £4 if you have 2 direct debits and £1 for logging into your banking app every calendar month. You can also earn an extra 1% when you shop with one of Natwest’s partners. However, there are very few partners and they include P&O and Europcar. How often would you use them?
The account comes with a fee (starting) at £2, which means most of us will earn £3 per month or £36 per year.
Barclays Blue Rewards
This account will pay you £7 per month as long as you have 2 direct debits set up and pay in £800. However, it does come with a £4 fee. Still, that’s £3 per month with little effort. You can also earn extra cashback if you have a mortgage, home insurance or a loan with Barclays. There are also various cashback rewards you can earn too.
Halifax Reward Current Account
With this account, you will need to pay in £750 per month and have 2 direct debits. For your troubles, you will be rewarded with £2 each month. On top of this, you can also earn up to 15% back when you shop at selected retailers.
Club Lloyds Account
This account doesn’t pay you cash but does offer other rewards. Each year you can choose between 6 cinema tickets, an annual magazine subscription, or an annual Gourmet Society membership. Club Lloyds also offers up to 15% cashback at select retailers and pays 1% interest on a balance between £1 and £5000 as long as you have 2 direct debits set up. This account costs £3 per month but the fee is waived if you can afford to pay in £1500.
That’s a lot of money to pay into accounts?
You may be slightly concerned (especially if you want more than one) of how much you have to transfer into these accounts each month. The money doesn’t have to come from your wages and can be transferred from any of your accounts. On payday, I will often transfer my wages through these accounts and then back again, before any of my bills are due to be paid.
What about direct debits?
Another issue you may face is having enough direct debits attached to your accounts. Moving your bills around isn’t ideal as you might lose track of where your money is going. Instead, I have used a few personal finance apps to act as my direct debits. There are plenty available, but 2 of my favourites are Plum and Chip. Why not take a look at the best budgeting and personal finance apps? Some even give you a bonus for joining.
How much do I earn?
Regular readers probably won’t be surprised that I hold all of the accounts above except for Natwest. And that’s only because they only recently changed how their rewards work… I may open one soon.
With all my accounts (bearing in mind I have a mortgage with Barclays) I’m earning just under £15 per month after fees, just by moving some money around. And with my free cinema tickets from Lloyds, that’s over £200 per year!