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Spend & Save

Money Insider: Co-op Bank fights back with a golden hello


The battle for new current account business gathered pace this week as Co-operative Bank and Nationwide Building Society launched new incentives to try to tempt would- be switchers.

It's been a very troubled few months for the Co-op Bank but it's good to see it back and fighting for new current account customers with a £125 golden hello, £25 of which will go to charity.

Despite the high-profile issues with the behaviour of former directors and the fallout regarding the £1.5bn rescue package, at a branch level it's been business as usual, with the excellent customer service for which it has been renowned for over the years still much in evidence.

There's a long way to go if Co-op Bank is to regain trust and repair its reputation but this could be the first small step in the rebuilding process. What it will do is deliver some welcome competition, in very short supply when it comes to decent customer service.

Nationwide Building Society is taking a slightly different recruitment tack by rewarding existing customers with £50 a time for referring new business.

As it has some of the better current accounts on the market, I'm sure existing customers will have few qualms in recommending the UK's biggest mutual to friends and family fed up with poor deals and/or sub-standard service.

Under the Refer a Friend initiative when an existing customer recommends a Nationwide current account, and that person switches their main account using the Current Account Switch Service, both parties will receive £50.

Customers can recommend up to ten friends a year, giving them the opportunity to earn up to £500 per annum.Both incentives are worth a closer look, but it's more about finding an account that mirrors the way you run your finances than short-term incentives alone.

Home in on an investment without risking your capital

Last Monday Castle Trust launched a new five-year savings tracker which returns 100 per cent of any rise in the Halifax House Price Index.

The new "Protected Housa" guarantees to return 100% of your capital after 5 years whatever happens to house prices, but is it a good deal?

With experts predicting property prices to rise by up to 25 per cent by the end of 2018 there's potential (but no guarantee) of a reasonable return compared with rock bottom rates paid on standard fixed rate savings bonds.

The current best buy five-year fixed rate bond from Aldermore at 3.2 per cent would deliver £170.57 in interest on a £1,000 balance over the full term – to get the same return from the Protected Housa there would need to be a 17 per cent rise in the house price index in the next five years.

If house prices rose by 25 per cent this would be the equivalent of a five-year fixed rate bond paying 4.57 per cent.

If you invest the minimum £1,000 and the index rises by 20 per cent in five years your return (including original deposit) would be £1,200 gross. But if property prices fell by 10 per cent in five years, you'd still get your £1,000 back. There are no upfront or annual management fees, though only the first £50,000 is protected by the financial compensation scheme.

The Protected Housa looks like a decent product – not one to put all your eggs into, but maybe as part of a broader savings portfolio.

Andrew Hagger is an independent personal finance analyst from www.moneycomms.co.uk