Exposed - the best and the worst interest rates on the high street

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When Martyn Stagg wanted to buy a new car, he trawled the internet. Within a week he was driving a six-month Vauxhall Vectra, bought with a £14,000 loan from Direct Line with an interest rate of only 6.9 per cent.

When Martyn Stagg wanted to buy a new car, he trawled the internet. Within a week he was driving a six-month Vauxhall Vectra, bought with a £14,000 loan from Direct Line with an interest rate of only 6.9 per cent.

"I'd taken out car insurance with Direct Line but never a loan," said Mr Stagg, a 29-year-old call centre manager. "They couldn't have been more helpful, especially when I needed to rush the paperwork through. In my job I'm aware of the importance of service, and theirs was most impressive. I've told three friends and they've all taken Direct Line loans, which shows the value of word of mouth."

Direct Line, part of Royal Bank of Scotland, this week came top of a league table compiled by Which? magazine, published by the Consumers' Association, showing the cheapest and dearest banks for personal loans and several other types of financial transaction. Over three years, according to Which?, a £5,000 Direct Line loan would cost a total of £5,550, beating Lloyds TSB, Alliance & Leicester and Nationwide building society by £82.

But Nationwide was rated the cheapest provider overall, although it was still £700 dearer than if an individual had picked all the individual best buys in the different categories.

The bank that was placed overall bottom, Alliance & Leicester, reacted furiously to the report's findings. Which? said A&L has the most expensive all-round deal, by a total of £1,502 across the different types of accounts. Its mortgage and insurance products languish at the bottom of the tables, and Which? dismisses most of its other offerings as "pretty mediocre".

A&L's spokeswoman says: "We completely refute the article's conclusions. Of the alleged £1,502 'saving', £1,212 is on the basis of the mortgage table, which compares the rate quoted on one particular day for one type of mortgage, for £80,000 over five years. A week later we had a product which fitted that category and we would have done much better. It's a gross distortion and utterly unfair."

Which? says it looked at the best penalty-free variable rate deal offered by the big providers, so it could easily compare the costs. The best mortgage deal came from Shepshed building society in Loughborough, Leicestershire, with a rate of 4.25 per cent and a guarantee it will not go more than 0.50 per cent above Bank of England base rate.

The magazine looked at current accounts, easy access savings accounts, mini-cash Isas, personal loans, credit cards, mortgages and insurance, and compared its own best buys in the market with the deals offered in the high street by the 11 biggest banks and building societies, excluding their internet offshoots such as Egg or Intelligent Finance. Together, these financial giants have 90 per cent of the banking market, so they have huge power and the ability to influence the financial decisions of millions of people.

Helen Parker, the editor of Which?, says: "None of the banks can be relied on to give you consistently good value and, in some cases, they're just plain expensive. So next time you need a loan or a savings account, don't just pick up the phone to your bank. If you shop around, there's a good chance you'll find a much better deal elsewhere, and the savings you make could add up to hundreds of pounds. And if you find yourself stuck in an uncompetitive account, switch. If you make the right choice you could be a lot better off."

It is not even possible to assume that any one banking group will be consistently best or worst. Although Direct Line was the best buy among personal loans, its parent, Royal Bank, came bottom of the same table with an overall cost of £6,391 for £5,000. NatWest, another Royal Bank offshoot, rated only two places higher on £6,082. Which? points out that Royal Bank's internet site charges only 9.9 per cent, which on the £5,000 loan used as the basis of its table, would work out £600 cheaper than the branch rate.

David Outhwaite, a Royal Bank spokesman, said: "It all depends on the criteria they set, but the banks within our group have always been separate and competing with each other. Direct Line is phone and internet, and Royal Bank and NatWest are full-service banks with branch networks as well as phone and internet. In any case, our experience is that people choose an account on far more factors than interest rate alone."

The annual cost of borrowing on a credit card is just as variable, ranging from £22 from the US-owned Capital One Circle Rebate Mastercard to £52 for the Bank of Scotland Classic. Which? says: "Which card is best for you depends on how you use it. If you pay off the balance in full every month, the APR doesn't matter, but if you tend to have a balance outstanding, a low interest rate of 13 per cent or less is more important. It's also worth looking at whether the card gives you cash back on your spending."

On the savings side, there was less to choose between the providers of mini-cash Isas, but it was still enough to make it worth shopping around. The best, HSBC's Cash Mini Isa, pays £653 on £15,000, nearly £100 more than the worst in the table, the Halifax Isa Saver.

Other savings vehicles showed more dramatic swings, though. The survey confirms that the hottest battleground in personal finance now is payment of interest in current accounts. Halifax led the way three years ago, and it is still top of the table with the bank which has since become a fellow subsidiary of HBOS, Bank of Scotland. But, at 3.04 per cent, they do not have the high ground to themselves: Abbey National has come alongside at the same rate. Not far behind are Nationwide, alliance & Leicester and First Direct.

But the other leading banks are still refusing to join in this particular game, arguing that it would be money ill spent as most people are not bothered about being paid interest on their current account. So Barclays, HSBC, Lloyds TSB, Royal Bank and its NatWest offshoot pay a curmudgeonly 0.1 per cent. The table excludes internet-based accounts, so that rules out Lloyds TSB's recent deal for those paying in at least £1,000 a month and not keeping more than £5,000 in the account.

There is a similar gap between the mean and the generous in easy or instant access savings accounts. On a £5,000 deposit, Bank of Scotland walks way with the prize because it pays £188 a year in its account, £23 ahead of Alliance & Leicester's Easy Saver. Lloyds TSB props up this table, paying a mere £10 on £5,000, with Barclays and Royal Bank not much better at £13 interest. Again, the split approach at Royal Bank shows through, as the NatWest Savings Direct account pays a far more respectable £138.

And when Which? looked at travel, buildings and contents insurance they found that the banks all trailed behind specialists such as Direct Travel, Help the Aged and Legal & General. The report's conclusion: it pays to shop around.

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