Money Insider: Hats off to Co-op for 'try before you buy' strategy
Saturday 25 September 2010
Competition remains intense across all areas of the personal finance arena with banks, building societies and card providers using their marketing expertise and bulging advertising budgets to try to capture a greater share of the market from their rivals.
Over the past few years this has resulted in increased use of cash incentives or short-term discounts being offered as the bait to tempt customers to sign up for a new card or account.
The problem with this strategy is that whilst it may win over a few more people in the short term, many will soon take their custom down the street in search of another financial freebie, or if they do stay, the card or account will soon become dormant as they weren't really interested in the product in the first place.
So whilst some people may benefit from a few quid extra in their back pocket, the real impact of the cash handouts may not be as impressive or profitable as the bank sales department's initial recruitment figures would suggest.
This week the Co-operative Bank launched an initiative to try to convince existing and new customers that their packaged current accounts offer good value for money and were worth a closer look. However it's refreshing to see that they haven't reverted to offering a cash incentive or the first couple of months at half price, instead customers are invited to test drive the account for themselves free of charge for a full 12 months.
Packaged current accounts have received plenty of bad press in the past, much of it deserved due to claims that customers were being switched to the fee-paying accounts without realising it or understanding what benefits the accounts were offering.
I'm not saying that a packaged account will work out to be the right choice for everybody, as it will come down to your own particular lifestyle and circumstances.
However, by giving people a whole year to try before they buy, the Co-operative Bank will win new business based upon the underlying features of a product and whether they are suitable rather than attracting those chasing a fast buck, a strategy that will win customers who will remain loyal for years to come. The incentive is available until 20 November 2010 to new and existing customers who use the bank's dedicated switching team to make their Co-operative Bank current account their main bank account.
Access to the offer requires a minimum monthly payment of £800 into the account
Aldermore and ICICI cut bond rates
This week a raft of high-profile fixed-rate products continue to be pulled or have rates cut.
The one-year bond market has seen most of the activity, with long-time chart-toppers Aldermore and ICICI Bank UK both cutting rates by 0.25 per cent.
On the plus side, Northern Rock has launched a one-year fixed-rate bond paying 3 per cent and is now sitting at the top of the best buys.
While 3 per cent may now be the top rate on a fixed-rate deposit, it's worth remembering that you can still get 2.80 per cent on an instant access account from AA Savings (including bonus for first year), so the additional benefit for fixing your rate and losing access to your cash for a year is actually very slim.
An alternative account is the new six- month fixed-rate bond from Leeds Building Society. Although a full half percentage point lower than the best one-year offering at 2.50 per cent, the big plus-point with the Leeds bond is that even though your return is fixed, you have the option of unlimited penalty-free access to your savings.
Away from fixed-rate bonds, Norwich and Peterborough Building Society launched its new e-Family Regular Saver account paying up to 5 per cent fixed in year one.
The online account is available to families with dependent children aged up to 16 (or 18 if in full-time education). You must pay in between £1 and £250 per month for which you earn 2 per cent fixed, however if you save every month for the first 12 months and make no more than one withdrawal during that period, you are rewarded with an additional bonus of 3 per cent.
Even though the savings market is a dark and gloomy place, there are still a few gems out there.
Andrew Hagger is a money analyst at Moneynet.co.uk
Independent Partners; request a free guide on NISAs from Hargreaves Lansdown
- 2 Harry Potter fans can apply to the Hogwarts-inspired College of Wizardry
- 3 Jessica Chambers: 19-year-old woman 'doused with lighter fluid and burned alive' in the US
- 4 Russell Brand calls Nigel Farage 'poundshop Enoch Powell' in BBC Question Time debate
- 5 Orange Wednesdays are no more
Disgruntled RBS worker writes hilarious open letter to Russell Brand after anti-capitalist publicity stunt leaves him hungry
Nigel Farage defends Kerry Smith 'ch***y' comment: 'If you are going for a Chinese, what do you say you’re going for?'
Nigel Farage's approval rating hits 'record low' as popularity suffers in wake of Ukip sex scandal
Pakistan school attack live: Taliban kill at least 132 children in 'horrifying' massacre
Sony hack: Angelina Jolie branded 'seriously out of her mind' in further embarrassing leaked email saga
Panic Saturday: 13 million Britons spend £1.2bn – while 13 million others across the country live in poverty unable to afford food
iJobs Money & Business
$200 - $350 per annum: Carlton Senior Appointments: Managing Producer Office...
$125 - $225 per annum: Carlton Senior Appointments: San Fran - Investment Advi...
Up to £70,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Up to £65,000 per annum + benefits: Sheridan Maine: Are you a qualified accoun...
Day In a Page
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
This five-bedroom red-brick beauty overlooks the village green and sits in just under two acres of land
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
A one-bedroom, luxury apartment with private gym and concierge service in Moorgate
A four-bedroom house in Hermitage Gardens with three reception rooms and landscaped gardens