Wednesday, 16 July 2014

How I got 22.5% guaranteed return on my investment

I just got myself a 22.5% guaranteed return on my investment.  Impossible you say? Not at all, it’s plain common sense.

First direct are offering £125 incentive to switch to their 1st current account. This is a limited time offer as, at the end of this month, it reverts to £100 again.

All you have to do is go to their site and click on apply now, fill in details of your current account and then within 7 days they will move all of your direct debits and payments to the new account. And you will get £125. But do read the terms and conditions, here are the most important ones:

  • ·      There is a £10 monthly charge which is waived if you have an income of £1000 per month (salary of £12000 after tax). There are other ways to avoid the fee – read on.
  • ·         To qualify for the £125, you must switch from an existing bank. Do not open a new account with them.
  • ·         £250 fee free overdraft
  • ·         Pays no interest on balances, but will give you a separate 6% interest paying savings account.
  • ·         No need to set up a direct debit to receive benefits (unlike some other current accounts that require direct debits set up)
And they seem to have great customer service, with humans at the end of their phone lines, which are open 24/7.

So what was that thing about return on investment? Well, I have multiple current accounts (as do all finance savvy individuals). So, I switched one of my dormant current accounts to first direct. And got myself £125. But what about that pesky £1000 monthly fee – well after a brief perusal of their site, they state:

Is there a charge to bank with first direct? Banking with first direct usually costs £10 a month, but you will not be charged this fee for the first six months from account opening, when you pay in at least £1,000 to your 1st Account each month, or maintain an average monthly 1st Account balance of £1,000, or you hold a selected first direct additional product. Take a look at our Interest rates and charges for more details of other additional products.

Which was confirmed with their customer services team over the phone. So here’s my plan:

  • ·         Switch accounts (£125 reward)
  • ·         Put £1000 into the account and leave it for 6 months
  • ·         Switch away after 6 months (£100 for leaving)

So for investing £1000 for 6 months, I get back £225. Which is a 22.5% return on investment, for very little work, I cannot find any other investment vehicle that offers those kind of guaranteed returns. Even without leaving them after 6 months, 12.5% returns trumps the stock market for most average investors.  And the benefits are vast, instant access to cash (plus that overdraft) – just pay it all back before the end of the month, and there are no fees.

I’m not advocating milking the bank just for money, after all they are one of the few banks that offer truly great service, so by all means I might stay with them after 6 months, but let’s see how annoying Halifax get in the meantime, their £160 this year is quite enticing for now.

So what are you waiting for, go and earn some free money.  Comment below to let me know your thoughts and feedback.

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