A good stick to beat your bank with

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The Independent Online
The offer:

"Another windfall from the Alliance & Leicester" - pounds 30 for opening a current account. (The A&L tomorrow hands out its free shares as it becomes the first of a series of building societies to turn into a bank).

What's it really about?

The Alliance & Leicester sees pounds 30 as a relatively cheap way of getting people to bank with it.

It is said that the average person is more likely to switch spouse than bank account. So even an attractive product - which the A&L has - is unlikely to enjoy too much success against the traditional banks unless sweetened further. And hard cash is the best incentive, the A&L reckons.

In fact, while it might not be seen as an obvious choice for banking, the A&L does claim to be Britain's largest telephone bank as it has 1.6 million customers - which is more than First Direct. Account holders can use its 350 branches and have free access to any NatWest cashpoint or any machine in the Link network, as well as the A&L's own machines.

It is also worth noting that "cash for accounts" offers, while common in the student and youth markets, are still relatively unusual elsewhere. So if the promotion is successful, do not be surprised if more banks follow suit.

What's the catch?

To get the pounds 30, you must put pounds 300 into the account in the first month. This does not have to be your salary (and in the case of students a grant cheque will do) and you get your pounds 30 within 28 days of opening, assuming you have paid in the first pounds 300. Although the idea is that you should put in pounds 300 every month, in practice the A&L says it will not penalise account holders who do not.

There appears to be no other catch as you can keep your old bank account and you do not have to be employed or be a big earner.

Furthermore, the Alliance account itself looks a pretty good deal and was rated a "best buy" in Which? magazine last October for people who never go overdrawn or for those with pounds 500 overdrafts. The A&L also came out as among the best for service in a survey by Which?

As well as offering 24-hour, 365-day telephone banking, including electronic transfers to other accounts and automatic bill payments, the account has a low interest rate of 9.5 per cent (and no fee) for agreed overdrafts, and a pounds 20 buffer zone - a fee-free and interest-free service for people who slip into the red.

Do it?

Why not give it a go by opening an account while keeping your existing account running.

Use the A&L for a while, including paying some bills, but without the hassle of having to transfer all your direct debits and the like from your existing bank account.

If you are happy, the next time you get into an argument with your bank about unreasonable or unexpected charges, you will have a much stronger hand when you threaten to switch banks. In this way, just having the extra account could save you even more than the pounds 30 that the A&L is offering.

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