How far will the banks go to entice new customers?
Nationwide is offering a cash incentive for switching current accounts. Chiara Cavaglieri reports
Sunday 28 February 2010
Nationwide is the latest bank hoping to draw in customers by offering a short-term, £75 switching incentive. The offer expires on 5 March, but how does the Nationwide FlexAccount compare with the other big current account players on the market?
In purely financial terms, the building society's cashback incentive is not the most generous around – Alliance & Leicester's (A&L) Premier Account and First Direct's 1st Account offer a £100 switching incentive – although the A&L offer is due to end on 7 March. But, the first hurdle when comparing current accounts is to decide how the various options might fit in with your needs over the lifetime of the account.
"Current accounts are quite difficult beasts to compare because of the array of costs and features, and the fact that different people have different usage profiles," says David Black, a banking specialist at Defaqto.
Although it falls short of the best cashback offers, Nationwide comes into its own when you look at the terms of holding the account. First, there are no stipulations about the amount of money you deposit into the account, whereas First Direct demands at least £1,500 for three months and charges £10 for any month this is not kept up. Similarly, Halifax's Reward current account has a £5 monthly bonus but only for months that you deposit at least £1,000. A&L customers must pay in at least £500 a month to secure their £100 cash bonus. And, if you fail to pay in this money, A&L levies a £5 monthly fee.
The Nationwide deal is also open to existing customers, whereas most incentives are only for new customers, and if you have held an Abbey or Cahoot account in the previous three months you cannot get the A&L bonus because they are all part of the Santander banking group.
"Any switching incentive should be a bonus and not the main reason," says Michelle Slade of financial comparison site Moneyfacts.co.uk.
If you regularly dip into your overdraft, compare the facilities available. A&L is highly competitive with a 0 per cent equivalent annual rate (EAR) overdraft and no fees for pre-agreed overdrafts for the first 12 months. Even after the first year, there is a 50p daily charge which is capped at £5 per month. The First Direct account also looks good with the first £250 interest free and 15.9 per cent payable above this amount. In contrast, Nationwide charges 18.9 per cent EAR for authorised and unauthorised overdrafts and the Halifax account could be a real sting, charging £1 per day for being in the red and £2 if your debit balance reaches £2,500.
Halifax's £5 monthly incentive applies whether you are in credit or overdrawn. The £5 reward is fixed and ongoing, so as long as you can guarantee depositing £1,000 a month, you can rely on having an account paying you £5 every month. Santander's Preferred In-Credit Rate current account offers an impressive 6 per cent AER on balances up to £2,500, which is fixed for the first 12 months, as long as you deposit at least £1,000 a month.
Keep an eye out for additional perks. For example, the accompanying debit card to the Nationwide FlexAccount is ideal for travellers because it charges nothing for European transactions and just 1 per cent in the rest of the world. For other travel goodies, the A&L Premier account comes with free annual multi-trip European travel insurance. Also, once you're a customer you can apply for the Santander Zero card and enjoy 12 months at 0 per cent interest on balance transfers.
A bank's reputation is another consideration. The big high-street names don't often fare well in this area, but First Direct prides itself on its customer service to the extent that it will give you £100 if you aren't happy and want to move to another bank.
"All that some people want from their bank is a reliable and consistently good level of service," says Andrew Hagger of Moneynet.co.uk. "When you look at surveys, you'll see First Direct, Smile and The Co-operative Bank at the top for customer satisfaction."
Simon Read: Frozen in time - the expat British pensioners who deserve a better deal
Bargain Hunter: From The Outsider to 1984, catch a cut-price classic, read it in the rye
Donald MacInnes: My wasted hours in the retail deserts of Dixons-Carphone
Energy switching app Voltz allows users to switch with just a few taps
Money Insider: Smart alternatives to the pensioner bond
- 1 The truth about 'girl things': Three cheers for Heather Watson's honesty
- 2 Man who held up 'hire me' sign at Waterloo station returns a year later with 'I'm hiring' sign
- 4 Tennis fan suing Australian Open organisers for 'failing to shade spectators' during Murray match
- 5 Syrian refugee child beaten by Istanbul Burger King manager for eating customer’s leftover food
British Muslim leaders outraged after Eric Pickles says followers of Islam should 'prove their identity'
UK terror fears: My jihadist son returned from Syria mentally scarred – now he is being ignored
Nigel Farage: NHS might have to be replaced by private health insurance
Billy Crystal: 'Stop shoving gay sex scenes in my face'
French court convicts three over homophobic tweets, in case hailed as a 'significant victory' by LGBT rights campaigners
'We would evict Queen from Buckingham Palace and allocate her council house,' say Greens
iJobs Money & Business
Negotiable: Recruitment Genius: A Tax Assistant is required to join a leading ...
£16000 - £25000 per annum: Recruitment Genius: This is an exciting opportunity...
£45000 - £47000 per annum + bonus + benefits: Ashdown Group: Java Developer / ...
£35000 - £38000 per annum + Benefits: Ashdown Group: Marketing Manager - Marke...
Day In a Page
Hibernate during winter and make your living during the summer at this busy guesthouse with panoramic sea views, in the village of Lynton
A four-bedroom penthouse next to the Tate with direct views of St Paul's from two floors of luxurious living space
A four-bedroom detached home surrounded by spacious gardens and woodland, close to New Pudsey
An 18th-century, three-bedroom home near Langstone Harbour built from ships beams with vaulted ceilings and wood burning stoves
A five-bedroom semi-detached home with a mix of period and modern features in a popular and convenient location
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
A three-bedroom villa with self-contained flat, minutes from Lake Windermere
A deceptively spacious, beautifully presented Georgian home with 3000sq ft of living space and five reception rooms
A five-bedroom Victorian home with four receptions, superb gardens and paddock in Pembury
An eight-bedroom house on the south side of the The Green with cinema, wine cellars and summer house
This 17th century beauty is full of rustic cosiness, while the detached home office means you can also run a business
Four exclusive apartments in a Grade II-listed former medical school with 2,275 sq ft of living space and 18ft ceilings
A five-bedroom terraced house on the popular Peterborough Estate, ideally located for both Eel Brook Common and South Park
A state-of-the-art farm-building conversion on the former Cliveden Estate, with 11,420sq ft of internal space, cinema and wine cellar
A three-bedroom, 15th-century cottage with original features in the picturesque village of Sissinghurst
A six-bedroom terraced house with large south-facing roof terrace, cinema room and wine cellar
A new seven-bedroom home built in Queen Anne-style with swimming pool and parkland views in Mortimer
A listed, four-bedroom farmhouse in the rural hamlet of Rushall with detached barn, four acres of gardens and paddocks
A first-floor flat with two bedrooms, a spacious reception room and communal grounds in a leafy part of London
A three-bedroom flat with a spacious rootop terrace and balcony, accessed from a private gated courtyard
A Grade II-listed pile with six bedrooms, stables and 39 acres of grounds in Standlake
A two-bedroom flat with boutique hotel-style interiors, close to the foodie haunt of West End Lane
A two-bedroom flat in a beautiful old vicarage, with many original features, close to the city centre
A three-bedroom 16th-century home with an aga kitchen, private gardens and heated outdoor pool, in Hadleigh
A three-bedrom home in sought-after Queen's Gate Mews, with Italian marble-finished bathrooms
Surrounded by glorious countryside in the village of Udimore, sits this impressive four-kiln oast and barn conversion
A five-bedroom house in the picturesque village of Kettlewell, north Yorkshire
An 18th-century former coaching inn with original staircase, open fireplaces and beams throughout
A Grade II-listed Georgian town house with three bedrooms and a south-facing courtyard, near Arundel Castle
Feel on top of the world at this über chic penthouse on the 37th floor of one of Europe’s tallest blocks.
A Grade II-listed Victorian villa with six bedrooms and two further cottages, all with spectacular sea views
A grade II-listed, Georgian cottage with mature 50ft garden, perfect for summer entertaining
A magnificent Georgian pile with turrets, seven bedrooms, a heated pool and four acres of gardens
Fairoak Farm has five bedroom suites, gym, outdoor swimming pool and golf course
Chic two-bedroom river-fronted flat with a private lift that delivers you directly to your home
A spectacular seven-bedroom Tudor pile, once owned by Henry VIII, with 18 acres of land
A seven-bedroom Georgian property previously used as a picturesque wedding venue
A split-level flat in a church conversion with two en suite bedrooms and 1,200sq ft of living space
A three-bedroom bungalow situated behind an impressive stone wall, £645,000
Windsor Castle overlooks this three-bedroom Victorian cottage located on one of Windsor's smartest roads
Chapel House is a former vicarage with nine bedrooms in the beautiful Upper Wye Valley
A five-bedroom B&B and separate owner's accomodation with potential for conversion
Enjoy summer by the Thames in this two double-bedroom converted warehouse in Rotherhithe village