Basic bank accounts for the purpose of switching bonuses

Rithotyn

Has anyone got any experience of opening up basic bank accounts for the sole purpose of then closing them by switching to current accounts offering switching bonuses?

I recently switched my Nationwide Flex Plus to the Halifax Reward account as it was at the end of it's 5% interest lifespan and thought it may as well be used as the closing account for the the new Halifax Reward Account.

That done, and with the bloodlust now ignited for more free switching cash, I don't currently have any other available current accounts to close to switch "from".

I'm under the impression that opening current accounts can have a negative impact on my credit score so I don't want to waste any chance of opening these accounts offering the free cash by using up my credit good will with accounts that I intend to close nearly straight away.

Would opening several basic accounts for this purpose be sensible from the point of view that they wouldn't negatively affect my credit score?

I should have the typical requirements of 2 x Direct Debit side of it covered with dual Tesco Web Saver accounts (one currently open, another in progress), and the end aim of a £1000 (or whatever the maximum monthly deposit on the strictest account is) moving in a loop around all said accounts.

The end aim is to get as many of these free switching accounts open as possible, all drawing their direct debits from the two Tesco Web Saver accounts, all with the minimum pay in running in a loop around them all. Then a year later, switch each one at a time to whoever is offering a free switching bonus at that time, and let it run for another year.

Does this make sense? or are there serious flaws i've missed...

Thanks in advance.

saintalan

Rithotyn wrote: »

...
I'm under the impression that opening current accounts can have a negative impact on my credit score so I don't want to waste any chance of opening these accounts offering the free cash by using up my credit good will with accounts that I intend to close nearly straight away.

Would opening several basic accounts for this purpose be sensible from the point of view that they wouldn't negatively affect my credit score?
...

I am sure like most, myself included, you will have no problem but a cationary tale in my posts here.

Cheers

Alan

Rithotyn

Thanks Alan, I actually read your entire thread on that before I signed up to the forum earlier. It was one of the things that made me plan to open the basic bank accounts rather than the current accounts, as basic will not offer (taken or otherwise) any overdraft facility at all (as far as I can see).

From reading your tale, and correct me if I'm wrong, that the issue was that the current accounts you opened, rather than basic bank accounts, had a negative credit score due to (possibly?) the fact that despite you not taking credit, it was an option to do so and as such the credit check went ahead and caused you grief?

I suppose my question would be, will you get a switching bonus moving from a basic account to a current account?

Thanks for your help.

[Deleted User]

You CAN sign up and get a bonus for BASIC to FULL (e.g. move a Halifax easycash to Santander and bag the switching bonus). Just make sure you have the right number of direct debits/standing orders etc

However you can't switch TO a basic account. So you will always have *some* credit searches - by wherever is giving you the bonus - in light of you applying for a full current account to switch to (and thereby bag the bonus)

Also be careful RE: 2 x Tesco. I know they wanted different originator IDs back when I did it. So you would need 1 x Tesco and 1 x Paypal for example.

(this was years ago now though, my credit score is shot nowadays so I won't have these fun and games for a few years )

saintalan

Rithotyn wrote: »

Thanks Alan, I actually read your entire thread on that before I signed up to the forum earlier. ...

Thanks for your help.

You're welcome, I am sure you will be fine. The strange thing is if I hadn't wanted to bag a good deal on Vodafone I would have still been in ignorance!

I am a little unsure now whether to do any switching for 6 months or so. Anyway I could do with a break, I still have DD's, minimum pay ins, dates, sort codes etc etc swirling around in my head even though I have a spreasheet!

Good Luck

Alan

Rithotyn

My plan is probably to do it once a year, with any new offers that arise. Obviously I still run the risk of impacting the credit score with the current accounts I open that I plan to switch to, which is why I want to minimise that risk by ensuring that the accounts I intend to open to switch from are basic accounts. Reading from this site implies that basic accounts only perform, at worst, a soft check for ID purposes which should have no credit score impact.

Once I'm all up and running (or get rejected), i'll take a free Experian trial or similar and see what the overall impact has been.

I also have a growing spreadsheet - encrypted of course!

Rithotyn

Somerset_La_La_La wrote: »

I know they wanted different originator IDs back when I did it. So you would need 1 x Tesco and 1 x Paypal for example.

(this was years ago now though, my credit score is shot nowadays so I won't have these fun and games for a few years )

I'm hoping to avoid having to use Paypal - is two different Web Saver accounts sufficient? Other posts on this forum imply that it is, and that's what I'm in the process of setting up.

SJshah

Rithotyn wrote: »

I'm hoping to avoid having to use Paypal - is two different Web Saver accounts sufficient? Other posts on this forum imply that it is, and that's what I'm in the process of setting up.

From what I've read it should be okay.

If you want to be cautious, you should set up direct debits of at least £3-4 (not all £1) to stay within Tecso Banks "acceptable usage" if they have such a thing.

Right now I'm using Paypal manually for DD no1 and Tesco for no2...

Dird

So I'd be better asking for 5-6 basic accounts rather than current accounts Tomorrow then?

[Deleted User]

Dird wrote: »

So I'd be better asking for 5-6 basic accounts rather than current accounts Tomorrow then?

To switch from - yes certainly.

Sometimes basic accounts do appear on your credit file (I know my Barclays one currently does) - but they won't carry out a full credit search (only ID/Fraud searches) so either way the impact of a search is saved, and (depending on the basic bank) you may also save the 6 new basic accounts appearing on your report.

I'd certainly keep your oldest ones open on your report whatever happens, so you have a higher average account life.

The impact from 5-6 new accounts (if they all do appear) will hit you short term regardless, but at least you'll soften the blow by going for soft searches only, keeping your average account age up and hopefully avoiding all new accounts being loaded onto your credit file.

Obviously once you do switch, as long as you complete a 'full' switch (closure of old account, which is mandatory by some bonus terms) the new basic accounts will be closed and effectively replaced by the new full current accounts in approx 6 weeks (once all the relevant CRA updates have gone through)

Rithotyn wrote: »

I'm hoping to avoid having to use Paypal - is two different Web Saver accounts sufficient? Other posts on this forum imply that it is, and that's what I'm in the process of setting up.

Each organisation has an ID - e.g. if Tesco were 112233 then no matter how many direct debits were setup, they'd all come from ID 112233 (with different reference numbers per D/D instruction).

It certainly was on the T&Cs of one bank (Halifax I believe) that I joined, so people were using 1 x Tesco, 1 x Paypal for safety. Whether it was enforced or not is another matter. You'll have to check the conditions of the specific banks you plan to switch to - in regards to both switching terms and any monthly reward terms (e.g. Interest or £5 reward for Halifax etc)

Rithotyn

I suppose the next question would be is there an alternative basic, current or savings account that will pull money via direct debit other than Tesco? I really want to avoid paypal.