Monday 14 March 2016

Which is the best choice of bank accounts?

Jars with Dollars from Shutterstock

It’s safe to say that, after the recent recession, it will take many, many years before banks are able to establish a reputation that vaguely resembles ‘consumer friendly’. The question is, how hard are they actually trying?

The economic crisis from 2007-10, which was in many ways the result of irresponsible lending from banks themselves, led to a bailout from the taxpayer which peaked at £955 billion. And with the amounts of interest being offered by most banks on current accounts and Cash ISAs in recent years having plunged towards the derisory, they certainly haven’t endeared themselves to savers since.
That said, there are some good deals out there for those who are open to change in terms of who they bank with; not only in terms of new customer rewards, but also the interest, insurance and overdraft rates they offer.

Best deals for switching
The good news is that changing bank provider isn’t the hassle it once was, and can be done in a week with a minimum effort on your part. And with the marketplace becoming increasingly competitive, there are some good cash offers for switching. First Direct offer £100 straight off the bat, while M&S offer £100 in vouchers, plus £10 a month for the first year.

Halifax offer £125 for switching, plus an extra £5 a month. However, top of the pops is Clydesdale Bank, who hand out £150, plus guaranteed 2% interest on your balance. All of these will be contingent upon paying in a minimum amount each month, but this shouldn’t exceed £1,000, so no need to be alarmed.

Decent rates of interest
They say a bird in the hand is worth two in the bush, and getting cashback right away certainly has its appeal. But if you have a big balance to switch across and are thinking more long term, rates of interest may be more important to you. Santander do a decent deal of 3% interest (up to £20,000) along with 3% cashback on bills, while Lloyds have a handy offer of 4% on balances between £4,000 - £5,000.

For those with slightly smaller balances, TSB’s Classic Plus might be worth a shout at 5% on up to £2,000, with the added sweetener of £5 cashback on the first £100 you spend each month, and a linked savings account offering 5% (up to £250 a month).

Good insurance offers
Nationwide lead the way on this front, with their FlexAccount offering free European travel insurance for those under the age of 75, and with good rates if you want to upgrade to make it worldwide cover instead. Their FlexPlus account offers benefits such as worldwide travel cover, mobile phone insurance and breakdown cover. The only catch is that you’ll need to pay a monthly fee for this.

Best overdraft rates
If you’re often overdrawn, and getting fleeced for it, it makes sense to switch and cut fees. First Direct are pretty good here, charging no fee on the first £250 of overdraft (15.9% EAR thereafter). The other option is to set up a Nationwide FlexDirect account, which charges 0% on overdraft balances for the first 12 months. However, you will need to first check that the overdraft limit matches the one with your current provider, as this type of account charges a hefty £5 a day if you go over it.

So are the banks winning us over?
It’s somewhat encouraging to see better deals out there, although, it’s difficult to believe that such offers are from the goodness of bankers’ hearts. Instead, it’s a sign of a more competitive industry, and not just in the way of competition from rival banks. The alternative finance sector, which is headlined largely by peer-to-peer lending platforms, has brought in a more dynamic and fair approach to consumer finance, and it seems it’s slowly beginning to register with banks.

Either way, it’s all a bit more positive for us as members of the public, and the more benefits and rewards that come our way, the better. These deals are there to be taken advantage of, so don’t be shy to have a look into it, and to start putting some pounds back in the pocket of you and your family.

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