Money Insider: Is it time for a change of current account?
Saturday 28 May 2011
While many of us will switch our credit card balance at the drop of a hat and shop around for a new mortgage deal each time our fixed rate expires, when it comes down to moving our bank account it's a different matter.
There are many current accounts to choose from. Some come with enticing rates of credit interest, with others offering a more competitive deal for those who sometimes dip into the red.
Despite the best efforts of the marketing guys at the banks and building societies, large numbers of us remain loyal to the current account that we opened when we left university or received our first pay cheque.
So what's the reason for this misguided loyalty? Well, it seems that the main hurdles that providers have to overcome are consumer apathy and the perceived hassle involved in transferring your account to somewhere new.
When you realise that most of the standard accounts offered by the big high street players are paying a miserly 0.1 per cent interest on credit balances and charging close to 30 per cent for an unauthorised overdraft, perhaps a quick maths lesson may give you more of an incentive to "ditch and switch".
If you keep an average of £2,000 credit in your current account, at 0.1 per cent you'll receive a paltry £1.60 (after 20 per cent tax) in interest for the entire year, yet if you currently held a similar balance with the Preferred account from Santander you'd receive £80 in interest plus £100 for switching – starting to get interested now?
Another account worth a look is the Reward Current account from Halifax which pays you £5 every month (yes £60 per year) as long as you pay in at least £1,000 per month.
If this has whetted your appetite and given you some inspiration to go out and find a more suitable current account, there are a few things you need to take into consideration:
* You may be required to fund your account with a minimum amount each month; this typically varies from £500 up to £1,500 per month depending on the account you opt for.
* Beware of packaged accounts where eager bank staff will try to persuade you to opt for one of their accounts with add-ons such as mobile phone insurance, car breakdown cover or travel insurance. This may sound an attractive proposition until you realise that you'll have to shell out a monthly fee of anything from £6.50 to £25 for the privilege, and that you could potentially buy the specific cover you actually need cheaper elsewhere.
* Find out what the charges are for an authorised overdraft and how much you would be stung if you accidentally went over your limit.
* An account that offers a high rate of credit interest will often turn out to prove expensive for borrowing and vice versa, so opt for an account that fits your account usage.
* While credit interest of 5 per cent sounds appealing, don't forget to check the small print as in many cases these attractive interest rates will only apply to the first £1,000 or £2,500 of your balance.
* It's possible to receive financial incentives for transferring your current account, with First Direct and Santander offering a cash sum of £100 when you move across to them.
Remember if you can't be bothered to switch, it will be the banks profits that continue to benefit, and that'll be at your expense!
5.29% mortgage for Santander first-time buyers
This week Santander offered new hope to first-time buyers with its latest low rate on home loans up to 90 per cent loan to value.
To qualify for this new exclusive first-time buyer rate you need to hold a First Home Saver account, which pays 5 per cent interest on your savings balance as long as you credit your account with a payment of between £100 and £300 every month.
The account can be opened with a maximum lump sum of £5,000, and is available to non home owners aged between 16 and 35.
The current mortgage offer to Santander First Home Saver customers looks an attractive package, with a very competitive rate of 5.29 per cent and £495 fee, with a free basic valuation and £250 cashback.
It's good to see lenders offering incentives to encourage people to save hard for a deposit on their first home, with Yorkshire Bank and Nationwide Building Society launching similar schemes in recent weeks.
For those old enough to remember, it's a throwback to the mortgage process of the 1980s and 1990s, where you had to demonstrate to your lender that you were capable of saving a deposit, thus giving the lender the confidence that you would be able to afford your mortgage repayments.
Andrew Hagger: Moneynet.co.uk
- 1 A politically correct lefty goes to see Top Gear live – you'll probably believe what happened next
- 2 Woman accidentally shoots herself in the head while posing for a selfie
- 3 Isis burns woman alive for refusing to engage in 'extreme' sex act, UN says
- 5 David Starkey 'tells Amal Clooney to shut up and stop over-promoting human rights'
As a white man, I'm surprised more women aren't tweeting the hashtag #KillAllWhiteMen
Scotland may have to leave the EU even if it votes to stay in, David Cameron confirms
The day that Britain resigned as a global power
Almost a third of school pupils believe 'Muslims are taking over our country', study claims
SNP fury as HS2 finds 'no business case' for taking fast train service to Scotland
Gay marriage 'Bert and Ernie' cake bakery found guilty of discrimination in Northern Ireland
iJobs Money & Business
£40-50K: Guru Careers: We are seeking an experienced Software / C# Developer w...
£45,000 - £55,000: Neil Pavier: Are you looking for your next opportunity for ...
£45,000 - £55,000: Sheridan Maine: Are you a newly qualified ACA/ACCA/ACMA qua...
£50,000 - £60,000: Laura Norton: Are you looking for an opportunity within a w...
Day In a Page
On the market for the first time in more than 50 years, this six-bedroom home is a project with vast potential - spread over three floors of living space.
This five-bedroom home comes with a range of outbuildings including a large barn which could be converted into a self-contained granny-flat or rental.
Surrounded by rolling countryside, this four-bedroom barn conversion comes with a self-contained, one-bedroom annexe that could serve as an office or a holiday let.
Located near Harrogate town centre, this five-bedroom Victorian terrace is arranged over three storeys while a current study serves as an optional sixth bedroom.
A ground-floor flat in a country house, located a mile from Sway; this two-bedroom home would make an ideal weekend retreat on the edge of the New Forest.
On a popular residential lane in Caterham on the Hill, this four-bedroom family home offers a secluded garden and a convenient location for local schools and public transport.
Just a short walk from Westerham green, this three-bedroom cottage has a light kitchen with exposed brickwork and double doors that lead to a south-facing garden.
In a prime spot opposite the River Thames, this one-bedroom flat has an 18sq ft reception room with glass doors that open out to a private terrace.
Set in the hills above Llanwrda Village, west Wales, this 18th-century three-bedroom farmhouse has holiday-let potential from a separate barn conversion and annexe.
This charming end-of-terrace townhouse is arranged over three floors, with two double bedrooms and a private courtyard garden located at the rear of the property.
This four-bedroom Edwardian home offers a combination of original features and contemporary design after a renovation by the current owners.
Located in the University area, this semi-detached five-bedroom home is arranged over three floors - there's even a rear garden and off-road parking too.
Only a few minutes' drive from the charming town of Marlow, this two-bedroom home sits on the private riverside estate of Harleyford.
This detached four-bedroom home in Middleyard is arranged over two floors, with features that include a wood-burning stove and bespoke oak staircase.
In a row of eight detached Georgian residences, this five-bedroom home offers views of The Sound, Mount Edgcumbe and Cornwall from its impressive veranda and full-length balcony.
If you love cooking for friends this two-bedroom flat - complete with views of the iconic Battersea Power Station and an open-plan kitchen/dining area - will go down a treat.
Located above Grasmere village, this five-bedroom home is arranged over three floors and offers countryside views across Grasmere Lake towards Silver Howe.
Surrounded by the Western fells, this five-bedroom Georgian home retains many original features including panel-plastered ceilings, sash windows and fireplaces.
This six-bedroom home is set amongst three acres of grounds. Currently a large family home, Clift Hill has potential to make a B&B, subject to change of use permissions.
A former period coach house, Glebe Farm Stable is now a three-bedroom cottage with a double car barn, office, kennels and an outbuilding that's currently used as a gym.
Set sail for this four-bedroom farmhouse in Cowes. With five acres of land and an indoor pool, this home oozes character. There is even potential to let a one-bedroom annexe.
Surrounded by woodland, this five-bedroom manor house has plenty of outdoor storage space in the form of three converted loose boxes, two smaller outhouses and a woodstore.
This four-bedroom detached home comes with a double carport, useful workshop, garden and two walkways that offer views of the adjacent countryside.
With space for an equestrian business, a greenhouse for growing your own veg, a wine store and a gym; this five-bedroom home has all the ingredients for a country retreat.
This four-bedroom home has exposed brick chimneys and a vaulted ceiling in a breakfast room that's ideal for summer entertaining - the doors open to the patio and garden.
The decked roof terrace of this two-bedroom flat is perfect for summer drinks while large windows and ample storage space make for a light and spacious interior.
Surrounded by approximately 15 acres of grounds, this six-bedroom grade II-listed home has been extensively refurbished yet retains many period features.
This four-bedroom home comes with a two-bedroom cottage and commercial office, with planning to extend, in a stunning courtyard setting.
In a pretty Norfolk village, this four-bedroom family home is surrounded by landscaped gardens, with even a self-contained annex for guests.
A few miles from the seaside at Perranporth, this four-bedroom farmhouse sits amongst nine acres of idyllic grounds - including a lake and two barns used as holiday lets.
This five-bedroom home is arranged over three floors of a converted Victorian hospital, offering spectacular views of the Pentland Hills - only three miles from the city centre.
This four-bedroom detached home comes with grounds that span to approximately 2.5 acres, as well as two large patio areas and a double garage.
This four-bedroom cottage is a Grade II-listed town house, well-located for the thriving market town of Nailsworth.
A four-bedroom apartment on the ground floor of a stunning period property in North Yorkshire, with two kitchens and a large south-west facing garden.
This high-spec two-bedroom home is part of a smart collection of new flats at Beaufort Park and has a large decked balcony that's perfect for summer drinks.
Capitalise on the fabulous views of Trevone Bay by taking two homes and creating one spacious boutique B&B. Just a cliff-top walk from Padstow.
Overlooking a golf course, this six-bedroom Edwardian detached home spans four storeys and retains many period features including the original, operational servants' bells...
On the edge of the city, this six-bedroom home comes with an outdoor swimming pool and a large garage block that has annexe potential.
In a Grade II-listed manor just outside of Bath, this three-bedroom home is arranged on two floors with a skylight in a vaulted roof line.
Open the living room's bi-fold wooden doors to reveal a retro-style kitchen, and a conservatory leading to a paved garden at this three-bedroom home.
A Grade II-listed, four-bedroom home, in a charming Somerset village, with a two-storey studio that could be converted into a holiday cottage
A modern four-bedroom Victorian home, within walking distance to the high street
A luxury apartment in the Gothic mansion of Wyfold Court in Kingwood, offers six bedrooms spread over three floors and a turret
This school conversion, near Stockwell Tube, oozes New York loft style. The one-bedroom flat features double height ceilings and exposed brick work
This six-bedroom Georgian home is on three floors with open fireplaces, a two-oven Aga, an annexe, and cottage gardens with outbuildings and a car barn
High Crest House covers an impressive 9384sq ft, with almost three acres of grounds including a tennis court and summer house enclosed by electric gates
A six-bedroom farmhouse with separate accommodation in converted stables. Situated in the village of Church Aston, within walking distance to the market town
A two-bedroom flat with under-heated walnut floors and bespoke built-in storage. The Tube and Clapham Common are a short stroll away
A refurbished seven-bedroom townhouse with staff quarters, cinema room, superb gym, steam room and plunge pool
A minimnalist four-bedroom home designed to the highest spec, featuring glass walls and a kitchen space lit by a glass roof