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: the bonus is the bait, not the meal
A £220 cash bonus is a genuinely good thing and you should take it if it fits. But it is being reported as the headline, and for most households it is the smaller half of the story. A switching bonus pays once. A savings rate pays every year you hold the money, and it compounds. The banks understand this perfectly well, which is roughly why the bonus is the number on the poster.
Here is the number that is not on the poster. The Bank of England publishes what UK banks actually 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.
Read that again, because it is the whole argument. The average loyal saver is being paid 2.1 percentage points below the Bank of England's own base rate. The average saver who moved got paid above it.
What that gap is actually 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. Year two is £318 better. So is year three. (Illustrative, using published Bank of England averages for June 2026 — your own account will pay its own rate, and averages are not offers.)
Now do it for a smaller balance, because this is where the useful nuance lives. 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. For a household with a modest buffer, chasing the switching bonus genuinely is the better use of an hour.
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 wins — and it keeps winning every year afterwards, while the bonus never comes again. If your savings are north of about £8,300, the rate is the thing to fix and the bonus is a nice extra. If they are below it, take the bonus first and fix the rate when the balance grows.
The bit people get wrong: fixing money you need next week
A time deposit means the money is locked away for the term. That is precisely why it pays more. It is also why moving your whole emergency fund into one is a bad idea dressed up as a good one — an emergency fund that you cannot reach in an emergency is not an emergency fund, it is a bond. Our emergency fund guide and the emergency fund calculator work out how much genuinely 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 — that has no business earning 1.65%.
The tax trap that arrives with the better rate
Higher rates create a problem that low rates hid for years. 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 trivial — a few pounds — but the direction of travel is not, and this is the year a lot of people meet a tax bill on savings interest for the first time. 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. An ISA sidesteps the question entirely, because 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 actual rate on your savings — today, not "sometime". Open the app, find the account, find the number. Most people cannot name it, which is exactly the inertia the £12bn figure is measuring. Then multiply your balance by that rate, and by 4.30%, and look at the two numbers next to each other. That single sum is the whole decision, and it takes four minutes.
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 traps in that process, both from the BBC piece and both worth planning for. 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. That is the one genuinely good reason to sit on your hands here. If you are house-hunting, park this until you have completed. Everyone else, the case for waiting is thin.
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.
One last thing worth knowing while you are moving money around: FSCS protection rose to £120,000 per eligible person per authorised firm on 1 December 2025, up from £85,000. If spreading money across banks was on your list purely for protection reasons, the threshold is a good deal higher than most people still think it is.
None of this is a recommendation of any particular bank, account or provider — we do not make those, and we would tell you if we did. It is arithmetic you can do on your own balance in under five minutes, and for most households it is worth more per hour than almost anything else on the to-do list.