Money Insider: Bank accounts: look at more than just interest rates

 

If you were going to transfer your current account to a new provider, which bank or building society account would you choose? The results of a recent, inhouse survey reveal that when weighing up their options, most people focus on the interest rate paid on credit balances or the cost of borrowing on an overdraft.

However, there is another element that's worth checking out, namely the charges levied when using your debit card abroad.

Most providers will charge you a foreign transaction fee of 2.75 per cent on each cash withdrawal and purchase made by debit card, with a few banks also charging an additional transaction charge of between £1 and £1.50 per purchase.

To give you an idea of just how expensive this can be, if you use your card to spend £1,500 during your two-week summer break overseas, you'll pay £41.25 in foreign charges and even more with some banks which sting you for transaction fees on top.

Compare this with the interest return you can earn on your current account. Consumers may opt for a Lloyds TSB Classic Plus Account which pays a competitive, 1.5 per cent on balances up to £2,500. But even if you manage to maintain the maximum balance for a whole year, your interest payment after basic rate tax amounts to just £30.

Debit cards that don't levy a charge for overseas transactions are pretty rare, but take a look at the Gold Classic Current Account from Norwich & Peterborough Building Society, where you get free overseas debit card transactions as part of the deal. You only need to pay in a minimum of £500 per month to qualify for the free bank account, which is much less than with many competitors.

Norwich & Peterborough Building Society won "Best Debit Card for Use Abroad" in the 2012 Moneynet Personal Finance Awards.

It's no surprise to learn that the building society has seen debit card use double during the last 12 months as the word spreads and more people recognise the financial benefit of a fee-free payment card.

We can't always blame the banks

Rarely a week passes without a verbal attack on the banks; in fact it seems to be in vogue to rant about excessive bonus payments, overcharging, or poor customer service.

While some of the bad press may be justified, sometimes we need to take a step back and remember that the customer isn't always getting a terrible deal, and in the main has more than enough commonsense to manage his or her affairs without being spoon-fed.

This week produced another slating as Which? called for action on what it deemed were complicated and exorbitant overdraft charges.

Now while the level of charges does appear excessive in some cases, the crux of the matter is that we are talking about unauthorised borrowing – in other words when the customer goes into the red without arrangement or exceeds his or hers agreed overdraft limit.

Whose fault is it if we exceed our limit? As much as some people would like to, I'm not sure we can always blame the banks for that one.

We have access to our account balance 24/7 via internet banking, smart phones, text alerts or the hole in the wall, so the information is readily available and there for us to see.

As adults, surely it's not asking too much for us to keep a close eye on our finances, plus you can always play safe by arranging an overdraft with your bank on an "in case of need'" basis, just to give you a bit of a buffer in case you should mess up your spending calculations.

In most instances, if you exceed your limit and it's pretty much a one -off, if you approach your bank, there's a good chance they'll refund your charges as a gesture of goodwill.

Blaming the banks is easy, but so is keeping your account in order if you make the effort.

Inflation is falling but it's still tough for savers

There was some positive news this week when the Office for National Statistics announced that inflation (CPI) had fallen from 4.8 per cent to 4.2 per cent.

The reduction had been predicted by many City experts and should be followed by further falls over the next few months if all goes to plan.

However, the situation for savers is still dire in that they need an account paying 5.25 per cent gross just to maintain the spending power of their nest egg, a rate that's not achievable in the current market.

While fixed savings rates have increased, we need to see CPI dip below 3 per cent before we return to a situation where savers have a decent choice of products that give them a real return after tax and inflation.

Andrew Hagger – Moneynet.co.uk

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Arts and Entertainment
Attenborough with the primates
tvWhy BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
News
people
News
Campbell: ‘Sometimes you have to be economical with the truth’
newsFormer spin doctor says MPs should study tactics of leading sports figures like José Mourinho
News
news
Voices
Lance Corporal Joshua Leakey VC
voicesBeware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
Life and Style
Alexander McQueen's AW 2009/10 collection during Paris Fashion Week
fashionMeet the collaborators who helped create the late designer’s notorious spectacles
Sport
football
News
i100
News
Perry says: 'Psychiatrists give help because they need help. You would not be working in mental health if you didn't have a curiosity about how the mind works.'
people
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: HR Benefits Manager

    £40000 - £50000 per annum + pro rata: SThree: SThree Group have been well esta...

    Recruitment Genius: Office Manager / Financial Services

    £30000 - £37000 per annum: Recruitment Genius: Established in 1999, a highly r...

    Jemma Gent: Year End Accountant

    £250-£300 Day Rate: Jemma Gent: Are you a qualified accountant with strong exp...

    Jemma Gent: Management Accountant

    £230 - £260 Day Rate: Jemma Gent: Do you want to stamp your footprint in histo...

    Day In a Page

    War with Isis: Fears that the looming battle for Mosul will unleash 'a million refugees'

    The battle for Mosul will unleash 'a million refugees'

    Aid agencies prepare for vast exodus following planned Iraqi offensive against the Isis-held city, reports Patrick Cockburn
    Yvette Cooper: We can't lose the election. There's too much on the line

    Yvette Cooper: We can't lose the election. There's too much on the line

    The shadow Home Secretary on fighting radical Islam, protecting children, and why anyone in Labour who's thinking beyond May must 'sort themselves out'
    A bad week for the Greens: Leader Natalie Bennett's 'car crash' radio interview is followed by Brighton council's failure to set a budget due to infighting

    It's not easy being Green

    After a bad week in which its leader had a public meltdown and its only city council couldn't agree on a budget vote, what next for the alternative party? It's over to Caroline Lucas to find out
    Gorillas nearly missed: BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter

    Gorillas nearly missed

    BBC producers didn't want to broadcast Sir David Attenborough's famed Rwandan encounter
    Downton Abbey effect sees impoverished Italian nobles inspired to open their doors to paying guests for up to €650 a night

    The Downton Abbey effect

    Impoverished Italian nobles are opening their doors to paying guests, inspired by the TV drama
    China's wild panda numbers have increased by 17% since 2003, new census reveals

    China's wild panda numbers on the up

    New census reveals 17% since 2003
    Barbara Woodward: Britain's first female ambassador to China intends to forge strong links with the growing economic superpower

    Our woman in Beijing builds a new relationship

    Britain's first female ambassador to China intends to forge strong links with growing economic power
    Courage is rare. True humility is even rarer. But the only British soldier to be awarded the Victoria Cross in Afghanistan has both

    Courage is rare. True humility is even rarer

    Beware of imitations, but the words of the soldier awarded the Victoria Cross were the real thing, says DJ Taylor
    Alexander McQueen: The catwalk was a stage for the designer's astonishing and troubling vision

    Alexander McQueen's astonishing vision

    Ahead of a major retrospective, Alexander Fury talks to the collaborators who helped create the late designer's notorious spectacle
    New BBC series savours half a century of food in Britain, from Vesta curries to nouvelle cuisine

    Dinner through the decades

    A new BBC series challenged Brandon Robshaw and his family to eat their way from the 1950s to the 1990s
    Philippa Perry interview: The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course

    Philippa Perry interview

    The psychotherapist on McDonald's, fancy specs and meeting Grayson Perry on an evening course
    Bill Granger recipes: Our chef recreates the exoticism of the Indonesian stir-fry

    Bill Granger's Indonesian stir-fry recipes

    Our chef was inspired by the south-east Asian cuisine he encountered as a teenager
    Chelsea vs Tottenham: Harry Kane was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope

    Harry Kane interview

    The striker was at Wembley to see Spurs beat the Blues and win the Capital One Cup - now he's their great hope
    The Last Word: For the good of the game: why on earth don’t we leave Fifa?

    Michael Calvin's Last Word

    For the good of the game: why on earth don’t we leave Fifa?
    HIV pill: Scientists hail discovery of 'game-changer' that cuts the risk of infection among gay men by 86%

    Scientists hail daily pill that protects against HIV infection

    Breakthrough in battle against global scourge – but will the NHS pay for it?