The story: BBC News reported on 16 August 2026 that more than five banks are currently offering incentives to switch current account, the largest worth £220. The piece cites research from Hargreaves Lansdown, which surveyed 3,000 British adults in August 2026 and found that almost two thirds of British savers have been with the same bank for more than a decade, while 34% moved their money in the last twelve months. Hargreaves Lansdown estimates, from its analysis of Financial Conduct Authority data, that staying put costs British savers around £12bn in missed interest every year.
Our view
A switching bonus pays once. A higher savings rate pays every year you hold the money.
The Bank of England publishes what UK banks pay on deposits, and in its most recent figures, for June 2026, the weighted average rate paid on interest-bearing sight deposits held by individuals — that is instant-access savings and interest-paying current accounts, the accounts most people's money is sitting in right now — was 1.65%. Over the same month, the weighted average rate on new time deposits from individuals, meaning fixed-term savings people had just opened, was 4.30%. Bank Rate, held at 3.75% by the Monetary Policy Committee on 30 July 2026, sits between the two.
The average instant-access saver is paid 2.1 percentage points below Bank Rate; the average new fixed-term saver is paid above it.
What that gap is worth, in pounds
Take a household with £12,000 set aside — a fairly typical emergency fund plus a bit of slack. Left in an instant-access account paying the June 2026 average of 1.65%, that earns £198 over a year. Moved to a fixed-term deposit at the June 2026 average new rate of 4.30%, the same £12,000 earns £516. The difference is £318 a year, for the same money, taking the same risk, in an account protected the same way. Add a £220 switching bonus on the current account alongside it and year one is £538 better. In later years the difference is £318 a year. (Illustrative, using published Bank of England averages for June 2026 — your own account will pay its own rate, and averages are not offers.)
For a smaller balance: On £3,000, the same two rates produce £49.50 versus £129 — a gap of £79.50 a year. Against that, a £220 bonus is worth nearly three years of the rate gap. On a balance that size, the switching bonus is worth more.
The crossover sits at roughly £8,300. Below that, a one-off £220 beats a year of the 2.65-point rate gap. Above it, the rate gap is worth more, every year.
Keep your emergency fund instant-access
A time deposit means the money is locked away for the term. So an emergency fund does not belong in one, because you need to reach it in an emergency. Our emergency fund guide and the emergency fund calculator work out how much needs to stay instantly reachable. That part stays liquid, even at a worse rate. It is the money above that line — the deposit you are building, the tax bill sitting there until January, the money with a known date on it — can go into a fixed-term deposit.
Tax on savings interest
Your Personal Savings Allowance, per GOV.UK, is £1,000 of interest tax-free for a basic-rate taxpayer, £500 for a higher-rate taxpayer, and nothing at all for an additional-rate taxpayer. At 4.30%, a basic-rate taxpayer uses up the full £1,000 at around £23,300 of savings. A higher-rate taxpayer uses up their £500 at around £11,600.
Which means the £12,000 in our worked example, earning £516, has already tipped a higher-rate taxpayer past their allowance. The tax due on the excess is a few pounds. If your other income is under £17,570 there is also a starting rate for savings of up to £5,000 on top, tapered away by every £1 of other income above your Personal Allowance of £12,570. ISA interest does not count towards the allowance at all — ISAs explained covers how that works, and we wrote about the same trap catching NS&I fixed-rate savers earlier this month.
Two things to do this week
1. Look up the rate on your savings. Multiply your balance by that rate, and by 4.30%, and compare the two.
2. If you are switching current account, use the Current Account Switch Service. Per the BBC report, over 50 UK banks and building societies are signed up; you give your new bank the switch date and old account details, allow seven working days, and it moves your direct debits and standing orders, transfers the balance, redirects incoming payments including salary and benefits, and closes the old account. If anything goes wrong you are refunded any interest and charges on either account. You can check which banks participate at currentaccountswitch.co.uk.
Two things to watch, both from the BBC piece. Recurring card payments do not move automatically — subscriptions billed to your debit card have to be redirected by hand, and that is how people end up with a failed gym payment and a £12 charge. And your old statements disappear once the account closes, so download them first if you might need them for a mortgage application or a tax return.
On that: Sarah Coles, head of personal finance at AJ Bell, told the BBC that switching shows up on your credit report, and that if you are planning to apply for a loan or mortgage in the next twelve months you may want to wait until the deal is done. If you are house-hunting, wait until you have completed.
What is still uncertain
Switching incentives are withdrawn at short notice — the offers described on 16 August 2026 may not all still be open by the time you read this, so check before you count on a specific figure. The rate picture depends on Bank Rate, and the Monetary Policy Committee's next announcement is 17 September 2026. A cut would pull fixed-term rates down first, which argues for looking sooner rather than later; a hold leaves the gap roughly where it is. And the Bank of England's July 2026 deposit figures are not published yet, so 1.65% and 4.30% are the freshest official numbers available today.
FSCS protection rose to £120,000 per eligible person per authorised firm on 1 December 2025, up from £85,000.
None of this is a recommendation of any bank, account or provider.