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Spend & Save

Money Insider: Marks & Spencer serves up no-fees current account


Ever since the current switching service and guarantee was launched last September, there's been a slight increase in the number of people moving banks; but that could all change this summer, with Marks & Spencer planning to launch its first "no fees" current account.

The high street chain launched two packaged bank accounts in September 2012, both with monthly fees and with a range of benefits targeted primarily at M&S shoppers.

Later this year the M&S bank will launch its first mass market current account which has the potential to drive a lot of new custom from account- holders with the big banks who have until now been sitting on the fence, not sure where to switch for a better deal. This latest offering is simple and transparent and has a number of positive features that should appeal to a wide range of consumers.

For a start, the account comes with a £500 overdraft facility, of which the first £100 is interest and fee-free – a very useful safety net when compared with some of the measly charge-free buffers of £20 or less from some competitors.

The interest rate for overdrafts above the £100 mark is 15.9% EAR, one of the most competitive in the market.

Another refreshing aspect of this new account is that there are no unauthorised overdraft charges or fees for returning unpaid cheques or standing orders.

Charges associated with using a debit card abroad is another bugbear with UK holidaymakers, and although M&S Bank will charge 2.75 per cent on overseas purchases, there are no transaction fees for ATM cash withdrawals when abroad.

There isn't any interest paid on credit balances; however if you use your debit card in M&S stores you'll earn reward points at the rate of 1p in the £ paid to you quarterly in the form of M&S vouchers.

The icing on the cake is that you'll also receive a £100 M&S gift card if you transfer your bank account using the current account switch service.

It looks like a good all-round package with no hidden nasties and is likely to prove a popular product, particularly as it's backed up with 7 days a week branch banking in 29 M&S stores nationwide and a 24/7 UK call centre.

New current account from Santander is child's play

From Monday Santander is offering children the opportunity to open their own current accounts – the Santander 123 mini.

For children aged up to 10 the account must be controlled (in trust) by an adult who must also be a Santander current account customer. For children 11 and over the account is in the child's own name.

The concept of this new account is that when the child reaches 19 it will automatically be converted to an adult Everyday Current Account but, importantly, the same account number is retained.

It offers decent rates of credit interest, with 3 per cent payable on balances between £300 and £2,000. There's no interest if the balance is below £100, while between £100 to £200 the child earns 1 per cent gross on the whole balance and from £200 to £300 it's 2 per cent.

I'm pleased to see Santander is also introducing an interactive online calculator for 123 mini customers to help children manage their money.

Hopefully the next generation won't make the mistakes of the last one, where high-cost debt has caused so much heartache.

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