Money Insider: Don't let short-term perks decide your bank account


Competition for current accounts intensifies ahead of faster-switching guarantees.

With a little over two weeks until the new faster-switching rules come into play for people looking to transfer their bank account, it's no surprise that the banks are pulling out all the stops to maintain their slice of the current accounts market.

The latest move in the war to win over customers from rival banks comes from Halifax.

On Tuesday it announced a new Cashback Extras programme, where account holders can earn up to 15 per cent cashback via personalised offers from high street retailers including Morrisons, Argos and Homebase.

The scheme will launch in late September and will be available to customers who use online banking or mobile banking.

This move follows hot on the heels of an increased £125 welcome payment from First Direct and the recent 1 per cent debit card loyalty cashback deal from NatWest and Royal Bank of Scotland.

With savings of between 5 per cent and 15 per cent on offer, it's certainly an eye-catching promotion from Halifax, no doubt keen to make a noise as the current account war gathers pace, but only time will tell if the deal lives up to its promise and is enough to prevent customers moving to rival providers.

With the faster-switching rules due to kick in from 16 September there's a good chance we'll see more incentives and sweeteners as well as short-term promotional deals on overdrafts and credit balances as banks look to gain new custom and hold on to existing account holders.

This frenzied activity may look like positive news for consumers. However, a short-term or one-off incentive shouldn't be your sole reason for choosing a new bank account.

It's more important to take a long-term view and choose an account that reflects the way you run your finances.

You need to consider what would benefit you most – a cheap overdraft, credit interest, cashback or a cheap or free debit card abroad – unfortunately it's not a straightforward decision as the banks' offerings and tariffs vary widely.

Although the speedier switching process and the new customer guarantee could be the catalyst to get more people to ditch their bank account in search of something more suitable, many others simply won't switch because they don't know which account is best for them.

With a range of different rates and charges for accounts whether you're in the red or in the black, it's not a simple task for consumers to pick the bank account that fits the bill.

Some banks charge interest for overdrawn balances whereas others charge daily/monthly fees – this is just one of the many areas that makes account comparisons a nigh-on-impossible task for the man on the street. I also think many people will remain with their current provider because despite the best efforts of the marketing and advertising departments, deep down they still view all banks as much the same.

For other customers it will be less about the nuts and bolts of the individual bank accounts and more about a consistent and reliable service.

A good level of customer service from your bank counts for a lot, particularly when you have an issue on your account that you want to resolve in a hurry.

I've been frustrated by my own bank recently when I was faced with having to go through "push button" hell before eventually speaking to someone who was following a pre-prepared script in an offshore call centre.

All most of us want to do is speak to a human being to explain our query and for them to sort it out for us promptly and with the minimum of fuss. I don't know about you, but that sort of service would win hands down against a few extra pounds in cashback for me any day of the week.

Andrew Hagger is an independent personal finance analyst from