Changing the card you pay with can bring big benefits but, says finance columnist Andy Webb, don’t ditch your other banks yet:
I’m little excited about my latest current account.
The Chase UK product from US banking giants JP Morgan Chase is a digital-only affair that follows the standard set by Starling and Monzo.
There are many of the features you would expect from this type of FinTech, though not enough to convince me to jump ship.
Plus, you can’t yet set up direct debits — they’re coming later this year. So why am I now using this every time I spend money?
The big selling point is 1% cashback on every penny you spend. This trumps the rate you will get on most American Express credit cards, and since it’s a Mastercard it will be accepted everywhere. It is also fee-free to use overseas, so you will earn money back there, too.
And it will really add up. The average UK family spends around £30,000 a year, according to the Office for National Statistics.
Not everything is going to be eligible — your mortgage or rent for example — but even if we knock that amount in half, you would be up by £150 a year, just by changing the card you pay with.
Sadly though, this cashback is just for the first 12 months and personally I wouldn’t ditch my other banks just for this.
Instead, transfer spending money to your Chase account every week or month. A happy by-product of this method is that it’s also an easy way to keep to a budget.
Three current accounts with great rewards
Santander 123 Lite
Reward: Up to 3% cashback on bills
Fee: £2 a month
Halifax Reward
Reward: Choice of £5, a cinema ticket or two movie rentals a month
Fee: None if you pay £1,500 into the account each month
Club Lloyds
Reward: Choice of six cinema tickets, 12 movie rentals or a magazine
subscription each year
Fee: None if you pay £1,500 into the account each month
For more bank switching offers head to becleverwithyourcash.com
Open an account and bank on a treat
Cashback isn’t the only regular reward you can get from a current account. There’s no reason you can’t have a portfolio of different ones all earning you free cash or cinema tickets. Just make sure you follow the conditions each will have. Here are the top earners:
One of the banks Chase hopes to take on is Monzo. The pioneering app-only bank has built up some dedicated followers — but it’s never really made any money.
Judging by the last couple of annual reports, that needs to change fast. So Monzo has made the move into Buy Now, Pay Later (BNPL) — a service which splits payments out over a few months. Though the likes of Klarna have offered this for a while, Monzo is the first UK bank to do this.
And you can be certain that others will follow — Revolut already has a launch planned. But I am not sure how I feel about BNPL. On the one hand, I worry that it is yet another step towards this becoming the default way people buy things.
There are some well-documented risks with BNPL, such as the normalisation of spending what you don’t have, or that the marketing doesn’t always make it clear this is a debt you are taking on.
But, there seems an inevitability around all this so it is probably better that the likes of Monzo offer it, as there are affordability checks and watchdog oversight. Regulation won’t come to other services until late next year.
It also could provide Monzo with a revenue stream that can keep its very good current account going, though I’d much rather people only borrowed money when they really needed it, and not just to spread the cost of everyday items over a few months.
Who to follow
This week I want to shout out to Thando and Lindie Jacobs who run the Instagram page Skilled Finances (@skilledfinances). The Nottingham couple are great when talking about managing money with your other half.
Lindie and Thando’s top money tip: ‘Have H.O.T. (Honest, Open and Transparent) money conversations as a couple to prevent money issues in your relationship. You can start by budgeting together.’
Deal of the week
Over-55s can get a will drawn up free of charge this month. Just search for a participating solicitor near you via freewillsmonth.org.uk. If you’re younger you can book now for Will Aid next month where you will pay £100 to charity — that is still a decent saving.
Andy Webb is an award-winning blogger and podcaster from Be Clever With Your Cash. Follow via @andyclevercash on Twitter and Instagram
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