First Direct will scrap its £100 current account switching incentive from Monday, a feature that has been a mainstay at the internet and telephone-based bank for the last decade.
The move comes after both HSBC – its parent company – and NatWest have also axed bonuses for switching to them this year.
First Direct, which frequently tops the satisfaction polls for best bank, sometimes tinkers with the incentive on offer – but it appears it is scrapping it for good this time.
Juicy carrot: First Direct offering a cash incentive to switch to its current account has been a mainstay for the last decade
From next week, it will mean only Halifax and M&S Bank – another subsidiary of HSBC – will continue to offer cash incentives to switch current accounts.
Those wanting the First Direct bonus for opening the 1st account can still get it until Monday – and using this This is Money link, you can get a juicier £125 sign-up bonus.
If you use its switching service instead you’ll still get an £100 bonus. You have to pay at least £1,000 into the account in the first three months and the money should then arrive within 28 days.
The bonus is only for switchers who’ve never had an account with First Direct before.
NatWest and HSBC scrapped their £125 and £200 offers earlier this year.
However, First Direct had made its switching bonus a near permanent feature in the last decade.
Tashema Jackson, money expert at comparison website uSwitch, said: ‘Being offered a cash sum shouldn’t be the only reason for consumers to switch accounts.
‘How much interest you get on your savings, and how much you are charged for your overdraft are also key factors to take into consideration.
‘We’d hope that the savings made by the banks in withdrawing these incentives are passed onto their customers in the form of additional interest or rewards.’
Furthermore, Bank of Scotland, Halifax and Lloyds have made their current accounts less attractive this week.
Lloyds and Bank of Scotland are cutting the interest rate paid on their current accounts by 0.5 percentage points from July.
Halifax, which is part of Lloyds, is hiking the fee on its Ultimate Reward current account by £2 a month, from £15 to £17.
Customers with Club Lloyds accounts currently receive 2 per cent interest on balances up to £5,000. From July 1 this will fall to 1.5 per cent.
This is Money has contacted First Direct for a reason behind the move, when the last time it didn’t offer an incentive to switch and whether it will return in the future.
A spokesman replied: ‘It would be fair to say it’s been a long term fixture.
‘What I can tell you is we’ve a big announcement very soon and will let you know as soon as we’re able to.
‘Needless to say it’s exciting and pioneering as you’d expect from First Direct.’