Money Insider: Hats off to Co-op for 'try before you buy' strategy

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

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

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