In this article I detail the Barclays Blue Rewards scheme, look at what if offers and discuss whether its actually worth it.
I’ve previously talked about earning cash from bank accounts, but that mostly came via switching incentives, or as I prefer the term bank bribes. Barclay’s customers typically got a raw deal here, as it was one of the few banks not to offer incentives to switchers. In fact, I personally switched a Barclay’s account over to First Direct to take advantage of the latter’s £150 switching bonus.
What’s seldom discussed is switching, or opening new accounts to take advantage of rewards or savings offers. When interest rates were near zero that didn’t make sense, but with the Bank of England base rate projected to head towards 5%, savings accounts are beginning to look more attractive.
What is Barclays Blue Rewards?
Barclay’s Blue Rewards, is a rewards scheme you can choose to add to your Barclays current account.
It’s a pay-to-join scheme in which you get monthly rewards, and money back depending on the Barclays products you hold, e.g., Mortgage, loans, home insurance etc.
How do I join Barclay’s Blue Rewards scheme?
To be eligible for Blue Rewards, you must first have a Barclays a current account. The good news is that even the basic account is included.
There’s a £5 monthly fee (up from £3 previously), and you’ll need to have at least two active direct debits. Additionally, you need to have a minimum of £800 a month paid into the account, though the money doesn’t have to stay there.
Tip: The Barclays basic bank account is also a good one for switching away to other banks to take advantage of incentives.
Blue Rewards is something that’s been in place for a number of years but seldom made sense when you could earn more from switching incentives.
In fact, in a 2016 article entitled ‘Barclays Blue Rewards Blues’ (which this article replaces) I questioned whether value of the scheme as joining, or staying with Barclays over switching to the best incentive paying bank accounts at the time, meant losing out on up to £75 a year.
What are benefits of Barclays Blue Rewards scheme?
The benefits of the Blue Rewards scheme are based on your use of Barclays products. In a nutshell you’ll receive the follow:
- £5 current account cash reward
- £3 a month mortgage reward
- £1 a month personal loan reward
- £1.50 – £5 life insurance reward
- 3% cashback on home insurance.
These can and do change. The last time I wrote about the scheme, it was £3 a month to join, but you received £7 back, for net earnings of £4 a month or £48 a year.
Changes to the scheme for 2022 mean that your now £5 monthly fee, gets you a £5 reward, so your profit from the reward payment is zero. Presumably that makes sense to someone high up in Barclays’ marketing team, but it’s pretty bizarre for to the rest of us.
Extra rewards for additional Barclays products
Just as before, you will get additional rewards for holding certain Barclays products.
Those with a Barclays mortgage will be given an additional £3 a month, life insurance £1.50 a month or £5 with critical illness cover, £1 a month for a personal loan, and 3% cashback on home insurance.
In total, including the £5 loyalty reward i.e., for signing up, you could stand to receive £14 a month total or £9 a month net, which would translate to £108 a year.
When are Blue Rewards paid?
The monthly fee comes out your account on the second working day of the month, and rewards are usually paid on the third working day of each month.
How to get Blue Rewards cash
You would think the money you earn via the Blue Rewards scheme is paid directly in to your bank account. Unfortunately, just like the £5 fee and £5 reward, Barclays has complicated things somewhat. Instead, Blue Rewards cash is held in your Barclays Wallet. To access this and move the cash to your bank account, you need to log into your online banking, or app, and move the funds across to your account.
What are the alternatives to the Barclays Blue Rewards?
Barclays Blue Rewards first started in 2015, but it’s not the only ‘rewards’ account out there.
- Santander 123 Lite – £2 monthly fee but up to 3% on household bills capped at (£5 per tier)
- NatWest Rewards – £2 monthly fee but £4 back each month plus an extra £1 for using the mobile app
- Halifax Rewards – £3 monthly fee (waived when paying in over £1,500 a month), £5 a month cash back.
Bear in mind the benefits from any of these reward accounts above are surpassed by switching bonuses.
Barclays Blue Rewards Rainy Day Saver
The real benefit of the Blue Rewards scheme is the Rainy Day Saver, and exclusive savings account for Blue Rewards members, with an interest rate of 5.12%. This is so good right now it almost deserves an entire article on its own.
Base rates in the UK increased on 3 November 2022 from 2.25% to 3%. Rates are eventually expected to increase further, but given the almost unprecedented 0.75-point increase, the BOE is will likely be cautious about going too far too quickly.
At over 2% above the Bank of England base rate, the Rainy Day Saver is the best saving account around at the moment.
Interest is only paid on the first £5,000 so it doesn’t make sense to hold more than that. On that amount you’d stand to gain £256 a year. It’s easy access too, so you can add or withdraw money as you please.
Another plus, is that interest is calculated on a daily basis and paid monthly, meaning you aren’t going to have to wait a full year to earn.
You can only open one account per person, but there’s nothing to stop couples opening one each provided they both have their own Barclays current accounts and are Blue Rewards members.
You can find the Rainy Day Saver in the Products tab in your banking app or online banking, though you might have to click on ‘see all’ as Barclays will try to show you the lower Blue Rewards Saver (1.26%) which isn’t what you want.
Is the Blue rewards scheme worth it?
In short no. The Rainy Day Saver might have a headline leading rate, but it’s not worth switching your main account to Barclays. That being said, if you’re prepared to go the hassle of opening up a new account solely to access the Rainy Day Saver, then you would stand to gain versus the best alternative savings accounts.
The Barclays Blue Rewards scheme itself has never been worth it on its own and that was when the reward payment was larger than fee. As it stands now it’s even worse. Those with only a current account don’t gain anything at all.
It says something that Barclays often hovers around the bottom of the pile when it comes gaining new customers and is regularly up there with the worst for net customer losses. The fact that it refuses to compete with the likes of HSBC, Lloyds, Nationwide etc. on switching bonuses goes a long way towards that.
The opportunity cost of staying with Barclays rather than switching to another bank is between £125 to £200. Even, if you have other Barclays products, Blue Rewards still doesn’t make up the difference.
Maxing out the rewards would earn you a net £108 plus possibly another £10 on home insurance, and then you’d be tied in to a mortgage, loan, life insurance etc. that is unlikely to be cheapest around.
Its one saving grace is the Rainy Day Saver, which isn’t even a Blue Rewards product. It needs Blue Rewards to access though, and that’s where the dilemma comes in. Taking full advantage of the account would net you £256 a year, while sums above the £5,000 interest paying limit could be placed elsewhere for maximum benefit.
To take advantage of this though you’d need to already have, or to open a Barclays current account, and play around with moving £800 a month in and setting up direct debits. Whether the effort is worth the £128.5 extra interest over Tandem (2.55%), the next best easy access saver is something only you can decide.
If you are prepared to lock your money away for a little longer, for example 9 months at 3.95% with Atom Bank, the advantage of the Rainy Day Saver is reduced to £58.5 over the year.
The best savings rates are yet to come
The last interest rate rise was in November 2022, and some banks still haven’t caught up and passed this on to customers yet. It’s worth watching this space, as new accounts might start appearing soon.