If you're serious about making real money from bank switching, you already know the deal: most switching bonuses require a direct debit guide. But here's what catches people out—they think they need to set up a meaningful direct debit, something that costs real money every month.
Wrong.
In July 2020, you can qualify for switching bonuses worth £250, £500, even £1,500 by setting up a direct debit that costs you just a few pence a month. This guide walks you through exactly how to do it, why it works, and the specific options available right now.
Why Banks Require Direct Debits (And Why You Need to Know)
Before we get into the nitty-gritty of which service costs what, let's understand why banks care about direct debits in the first place.
Direct debits are a sign of commitment. They signal that you're moving your financial life to their bank, not just opening an account to grab the bonus and leaving immediately. From a bank's perspective, a customer who's moving their salary, council tax, utilities, and subscriptions to their platform is more valuable than someone who opens an account and doesn't touch it.
But here's the catch: the banks' terms rarely specify how much the direct debit needs to be. They typically just say something like "set up a direct debit to a UK domestic account" or "arrange at least one direct debit." They don't say it needs to be £1,000. They don't say it needs to be £100. Some of the best current offers literally just require one direct debit to be active—it doesn't matter if it's 30p or £300.
This loophole is perfectly legitimate. You're meeting the requirement. You're showing commitment. You're just being smart about it.
The Cheapest Direct Debit Options in 2020
Here's where this gets practical. Let's look at the actual services you can set up a direct debit for, ranked by cost.
Premium Bond Subscriptions (Free to £1/month)
If you're not already holding premium bonds calculators, this is genuinely the easiest option. National Savings & Investments (NS&I) allows you to set up a direct debit to buy Premium Bonds. You can start with as little as £10 and then buy more whenever you want. The beauty? No monthly cost whatsoever.
Yes, you're tying money up in bonds, but if you're serious about earning from switching and stoozing, Premium Bonds belong in your toolkit anyway. And unlike a direct debit to a charity (which goes out every month), Premium Bonds let you buy in lump sums. Your money isn't locked away—you can ask for it back any time.
Charity Donations (30p–£2/month)
This is the classic move. Nearly every charity in the UK accepts monthly direct debits, and you can set them as low as you want. Most charities will let you give 50p a month, though some have higher minimums (£1–£2).
The advantages:
- Monthly cost is tiny
- You're supporting a cause
- You can cancel anytime (though you should ideally give notice)
- It looks legitimate to the bank (because it is)
The disadvantages:
- Money actually leaves your account every month
- You need to cancel it properly if you stop wanting to support them
- Some people feel uncomfortable setting this up just for a bonus (though it's totally legitimate)
Suggested charities: Look for smaller, local charities in your area. They often need the money more and appreciate even small monthly gifts.
Streaming Subscriptions & Apps (£2–£8/month)
If you already use them, great—your streaming services, apps, or software subscriptions count perfectly. But if you're setting one up purely to meet the direct debit requirement, you're spending £2–£8 per month, which cuts into your bonus gains.
Services like:
- Spotify (£9.99, but often runs promotions)
- Apple Music (£10.99)
- Netflix (£6–£16)
- Disney+ (£7.99)
- Amazon Prime (£7.99/month)
Strategy: If you're genuinely using these services, brilliant—they count. But if you're not, skip them for this purpose. The goal is to maximise profit, not add subscriptions you don't want.
Insurance Premiums (Variable)
Breakdown cover, pet insurance, gadget insurance—all can be set up as direct debits and many let you pay monthly. The cost varies hugely depending on what you're insuring, so this is more about seeing what already applies to you than signing up for something new.
Council Tax, Utilities, Broadband (Required Anyway)
Here's the thing: if you're switching banks, you probably want to move your primary household bills anyway. Council tax, electricity, gas, broadband, mobile phone—these are legitimate major direct debits that show genuine commitment.
They also cost you money you'd be spending anyway, so there's no "extra cost" to qualify for the bonus. Win-win.
The Maths: Is It Worth It?
Let's do the sums. Say you've identified a bank switching bonus worth £250. To qualify, you need one active direct debit. What's the best option?
Option 1: Premium Bonds (£0/month)
- Set up a one-off purchase of £10–£50 Premium Bonds
- Cost to you: £0
- Bonus earned: £250
- Profit: £250
Option 2: Charity (50p/month)
- Set up a 50p monthly donation to a charity
- Assume you'll use the bonus account for 6 months before closing
- Cost to you: £3 (six months × 50p)
- Bonus earned: £250
- Profit: £247
Option 3: Streaming Service (£8/month)
- Set up Netflix or similar
- Cost to you: £48 (assuming you'd not use it otherwise)
- Bonus earned: £250
- Profit: £202
Even with the charity option (which costs a bit), you're earning real money. And if you use Premium Bonds, the bonus is pure profit.
Now scale this across multiple switching cycles. If you can do three switches a year (and with cooling-off periods, you can), that's £750 in pure switching bonuses. Add in ongoing interest from regular saverss, and you're easily looking at £1,000+ per year from legitimate bank switching.
Common Pitfalls to Avoid
Don't Get Greedy With Multiple Directs Setting up five direct debits to charities won't get you five times the bonus. The requirement is usually just one. Stick to one cheap option and move on.
Don't Forget to Cancel After you've finished with the account and you're ready to switch again, make sure you cancel your direct debit properly. Don't just close the account—contact the charity or service and formally stop the payments.
Don't Switch Too Fast There's a cooling-off period between switching banks. Typically, if you switch on one date, you need to wait before you're eligible for another bonus. Check the eligibility checker before starting your next switch.
Don't Set Up Debits to "Dummy" Accounts Some people try to set up a direct debit to another account they own, thinking they can move money around. Banks' fraud systems are wise to this. Stick to legitimate services and providers.
Combining This With Other Strategies
The real power comes when you layer strategies. You've got bank switching bonuses covered. But what about:
- Regular savers: Many banks offer 5–8% on regular savings accounts if you commit to saving a small amount monthly. You could use your switching bonus to fund this.
- Stoozing: Transfer your bonus to a 0% credit card and earn interest on your money while you spend it.
- Multiple switches: With cooling-off periods managed properly, you could potentially switch twice or even three times per year.
Check out our switching guide for the full strategy on how to stack these.
What to Do Right Now
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Check the current offers: Head to our live offers page and see what's available right now. Make a note of which bonuses require direct debits.
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Choose your cheapest option: Decide whether Premium Bonds, a charity, or something else makes sense for your situation. If you don't have Premium Bonds and want a completely free option, that's your starting point.
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Set it up early: Don't wait until the last minute. Set up your direct debit a few days before you need it. Banks can be finicky about timing, and you don't want to miss a bonus because a direct debit took three days to process.
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Document everything: Keep screenshots of the direct debit setup, the bank's confirmation, and the bonus terms. If there's ever a dispute, you've got proof.
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Plan your cooling-off periods: If you're planning multiple switches, map out the cooling-off periods now. Some banks require 12 months between switches; others are shorter. Our cooling-off guide can help you figure out your schedule.
Common Questions
Can I set up a direct debit to another account I own? Technically yes, but don't. Banks flag these as suspicious. Stick to legitimate services—charities, streaming apps, utilities, or Premium Bonds.
What if the bank rejects my direct debit as "not qualifying"? It shouldn't happen if you're using a legitimate service. But if it does, contact the bank and ask what they need. Most of the time, they'll accept anything that meets their stated criteria.
Do I need to actually use the switching service to keep the direct debit active? Not usually. Your direct debit can be tiny and ongoing. A 50p monthly charity donation keeps running indefinitely. But always check the specific bank's terms.
Can I cancel the direct debit immediately after getting the bonus? You could, but it's risky. Some banks have clawback periods where they'll take back the bonus if you close the account too soon (usually 3–6 months). Keep the direct debit active for at least that long, then cancel it.
Is it better to do one big direct debit or multiple small ones? One small one is always better. You're meeting the requirement while minimising cost. More direct debits don't usually mean a better bonus—they just cost you more money.