Why Do Banks Offer Switching Bonuses - I Don't Get It ??

[Gizmonster]

I just don't understand the concept behind enticing customers to switch banks - how does the bank make money out of it?
My missus switched banks a few months ago and received a £125 bonus .... and I did the same. She's recently switched this account to another account and received a £200 bonus and I'm also switching to the same bank and will also receive a £200 bonus.
Now even if people stick with the bank after they switch, how does the bank justify paying the switching bonus ..... I just don't understand how they make money from it ..... what am I missing??

[bednobs]

overdrafts?

[bednobs]

do companies pay the bank for DDs?

[Canary42]

The bank makes money out of yours, by investment if your account is in the black and by interest charges if you're in the red.

My bank currently pays 0.2% interest to me in my savings account but charges 18% on overdraft in my current account.

[Buenchico]

Your bank doesn't simply sit on the money that you've paid into it. The bank uses that money to make loans to other customers, earning them interest. If they can get more people having their wages or pensions paid into their accounts, they can make more loans and thus earn more interest, thereby improving their profits.

https://themoneycharity.org.uk/advice-information/bank-money/

[Gizmonster]

I suppose they'll recover their money from people who keep the account and pay their salaries in and possibly go overdrawn ..... and then there's people like me and my missus .... I bet the banks love us .... NOT ..... time to look for my next account to switch to :)

[bobbinwales]

They also try to get you to buy there insurance products and may share (sell) your details with selected partner's

[barry1010]

We swap banks a lot, too, made over £1000 in 18 months between us.
Don't forget banks make money every time you use your debit card or pay by phone linked to your account

[barry1010]

And yes, companies do pay the banks to handle direct debits

[davebro]

I've switched several times - it seems pretty easy now, but there's always a suspicion that something could go wrong. I keep a 2nd account with a separate bank as a back up.