Grab £100 cashback - and a better bank account!

Alliance & Leicester has once again brought back its market-leading current account offer, giving new customers the chance to bag £100 for switching to it. Here's why you should grab this great deal today!

Alliance & Leicester's Premier Current Account has this month reclaimed its place at the top of many current account best buy tables. After several months out of the limelight, the deal has once again swept aside its competition with a fantastic £100 cashback offer.

If you've never bothered to switch your current account before, now's certainly the time to take the plunge; A&L's cool cash incentive is unlikely to stay around for long.

However, if the promise of free money isn't enough to tempt you, here are three more reasons why you should ditch and switch your current account today!

1. Right now, you're probably earning a pathetic rate of interest

Current account providers have rarely been generous when it comes to the in-credit interest rates they offer customers. However, things have been worse than ever since the Bank of England took its scissors to the base rate.

This year, many Brits will have seen the rates paid on their current account balances fall to 0% - though it's unlikely most will have noticed.

Sadly, too many of us can't be bothered to switch to a new bank that would offer a better return on our hard-earned cash - despite the fact that we're in the deepest recession since world war two, and we should all be raking in every extra penny we can!

While the in-credit interest rate of 0.5% AER on offer from A&L may not look too impressive, it's important to look beyond this at the bigger picture.

Although the bank's similarly named Premier Direct Current Account pays 6% AER on balances up to £2,500, even this popular deal is unlikely to beat what's on offer from the Premier Current Account.

That's because, in order to earn £100 in interest during a year, you'd need to keep a hefty average balance of around £2,500 in A&L's Premier Direct account.

With most people unlikely to manage this, I think the Premier Account is a far easier - and equally lucrative - bet.

2. If you have an overdraft, it's probably expensive

As I know from personal experience, being regularly overdrawn in your current account can be an expensive business.

While they've been quick to slash the interest rates they're paying their customers since the credit crunch, many banks have been more than happy to hike up the amounts they charge when people's accounts drift into the red!

It's not unusual for an arranged overdraft to cost as much as 20% EAR - forty times the Bank of England base rate, and a far from competitive fee.

If you're overdrawn, it's important to ensure you aren't paying through the nose for the privilege - and switching your current account is a key way to combat high overdraft charges.

Right now, in addition to £100 cashback, customers who switch to Alliance & Leicester's Premier Current Account should get an interest free overdraft of up to £2,000 for 12 months.

However, it is important to be aware you will be credit scored before you can be offered an overdraft facility, and the size of any overdraft you are offered will depend upon your individual circumstances.

3. If you switch, you'll get free European travel insurance

A&L is also offering free annual multi-trip European travel insurance for under-65s when they switch to the Premier Current Account. According to the bank, this benefit is worth up to £60.

If you open a joint Premier Current Account with a partner, both account holders will automatically be covered by the travel insurance policy A&L provides.

However, be aware that this travel insurance may not offer you all the cover you need when you travel within Europe (for instance, if you plan to take part in risky sports activities). Nor will it cover you for any journey you make to a non-European destination.

While you may be able to upgrade your A&L travel insurance policy should you need to, it's important to note that this may not always be the best-value option.

Should you require additional cover, make sure you shop around and compare policies from a variety of sources before 'adding on' extra protection.

What you need to know about switching

Alliance & Leicester's £100 cashback offer comes with several conditions, so it's important to ensure none of them will affect you before deciding to open an account:

• You must use the bank's Premier Switching Service when you apply for the Premier Current Account, transferring all standing orders and direct debits from your existing current account to Alliance & Leicester. If you don't have any direct debits to switch, you won't be eligible for the £100 cashback.

• You must be able to pay a minimum of £500 per month into your Premier Current account, and must pay in £500 within 11 weeks of opening your account in order to qualify for your cashback. This cash must come from a non-Alliance & Leicester account.

• If you have held a current account with A&L, Abbey, Cahoot or Cater Allen within the last three months, you won't be eligible for the £100 cashback offer.

However, as long as none of these affect you, you will receive your £100 cashback within four months of opening a Premier Current Account.

**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**