From 5% cashback on your credit card to £800 worth of free benefits, here are five ways to get paid by banks and credit card companies.
Millions of people in the UK are thrall to lenders – paying thousands of pounds in unnecessary interest. If you know what you’re doing, however, you can earn money from them.
1. First Direct: £100 to join and £100 to leave
If you open a 1st Account and transfer £1,500 per month within the first three months, First Direct will add £100 to your account balance.
As part of its ‘satisfaction guarantee’, it promises to pay you another £100 if you’re unhappy with its service and close the account within 12 months.
What to watch out for
With the 1st Account, there are a number of potential pitfalls. Most seriously, you will be charged a £10 monthly fee if you fail to make the necessary monthly deposit. Leaving the account dormant for a year could cost £120 - twenty pounds more than your welcome bonus.
In order to qualify for £100 to close the account, you'll need to have deposited £1,500 for at least six months and close the account within 12 months.
2. Bag £5 a month with Halifax
While the majority of current accounts pay pretty abysmal interest rates, the Halifax Reward Current Account pays £5 every month you deposit £1,000 which equates to a possible £60 per year. What's more, you'll get your £5 every month even if you are overdrawn.
What to watch out for
Using your arranged overdraft up to £2,500 will cost you £1 a day - increasing to £2 above £2,500. You could end up severely out of pocket if you accidentally slip into the red as Halifax charges £5 a day for an unarranged overdraft facility.
3. American Express: £100 to shop
The American Express Platinum credit card pays 5% cashback on purchases within the first three months - up to £100.
After three months, you earn 0.5% when you spend up to £3,500, 1% between £3,501 and £7,500 and 1.25% on larger amounts.
In addition to rewards, it comes with a six-month interest free period on new purchases - giving you some breathing space to pay for an expensive item.
What to watch out for
With a 19.9% APR, you could end up with expensive interest payments if you don't clear the balance each month (after the six month interest free period has elapsed).
The company will not pay you for any month you fail to make the minimum repayment of at least £50. Likewise you will not get your money if you cancel the card within a year or spend less than £3000 during the first 12 months. What's more, you will be charged a £20 ‘dormancy fee’ if you do not use the card for a year.
4. Get £800 worth of free benefits
For one year, the Co-operative is waiving the £13 monthly fee for customers who open Privilege Premier account.
The Co-op claims this account offers £800 worth of benefits a year including free breakdown cover, mobile phone insurance and worldwide travel insurance. If you occasionally go overdrawn, there is a £300 interest-free overdraft.
What to watch out for
By offering a 12-month free trial, the bank hopes satisfied customers will hang onto the account when the fee kicks in. Undoubtedly, some people will simply not bother to switch after a year.
You will need to deposit at least £800 per month and use the bank's switching service.
Further, make sure you check for exclusions and technicalities on these ‘freebies’.
For instance, the travel insurance will not cover holidays of more than 45 days.
Also, beware this is a limited offer until 15 January.
5. If you’re savvy…
If you’re a bit of a financial wizard, you could consider ‘stoozing’. This is where you borrow money on a credit card that comes with a long interest free introductory period and put this money into a high-paying savings account. Once the 0% period is over, you clear the balance and keep the interest earned.
What watch out for
Since the advent of balance transfer fees, it has become increasing difficult to make money from stoozing. Say the fee is 3%, you would pay £30 on a debt of £1000 – make sure you find a savings account with a competitive enough rate to offset this fee.
By Daniel Milano
