Money Insider: Nationwide's tough call to reduce queues

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The Independent Online

The UK's biggest building society came in for some fierce criticism this week after announcing that its card customers wanting to withdraw less than £100 would have to use the ATM with effect from 7 June. This contentious move is an attempt to provide a better service for the majority of customers as Nationwide revealed that a third of counter transactions are carried out by just 8 per cent of its customers.

Some of those who prefer to go to the cashier to make their withdrawal will be the more elderly customers who are less comfortable with the concept of drawing cash from the hole in the wall, worried that they can't remember their PIN or perhaps feel unsafe withdrawing cash in the street.

However the Nationwide is caught between a rock and a hard place because if it doesn't take action then there will be continued unrest among the vast majority of customers who visit branches less frequently but always face long waits when they do so.

There will undoubtedly be some customers who will be unhappy with these changes, but the Nationwide, like any other high street retail outlet, needs to balance service and profitability and in this current competitive environment, the latter can't be sacrificed just to placate the minority, no matter how unpopular the move may appear to be.

It's important to remember that the new counter withdrawal limit only applies to customers who already have a card based account, so they will have already have been provided with the means to access their cash from the ATM, although the branch staff from the Nationwide will need to work hard in the next couple of months to re-educate and reassure those who are affected.

In recent weeks we've heard of plans to expand the banking services offered by the Post Office, but managing queues will be one of the major challenges they'll face too, as offering a wider range of services will bring greater footfall to what are in many cases already congested outlets.

Store cards under spotlight

As the election draws nearer and the parties continue to pick holes each other's promises, it's not surprising that the budget deficit, spending cuts and taxation still seem to be the main talking points. But looking at the manifestos in more detail, it's interesting to see what the three main parties are planning when it comes to matters of personal finance.

While Labour pledges to maintain the Child Trust Fund, the Liberal Democrats say they will end public contributions to this popular form of saving, and the Tories plan to cut spending in this area for all but the poorest of families or those with disabled children.

Another strong area of focus is store cards. Both the Liberal Democrats and Tories plan to introduce a cap or maximum interest rate on store card interest rates. The sector needs looking at, with some cards currently charging rates higher than 30 per cent while others are operating on a far more palatable 19.9 per cent, not much higher than the average credit card rate.

However, any cap on store card rates needs to be considered carefully as lenders will see the maximum rate as an acceptable level at which to charge and we could end up with the majority of cards charging the same rate.

This may not be a bad thing as long as the cap isn't set too high, although there is also a danger that if the rate is set too low, some providers may withdraw from the market and customers may be tempted to turn to other, more expensive sources of credit such as doorstep lenders.

Savings rates still tumbling

It's been another terrible week for savers with a number of the top paying accounts being withdrawn or having interest rates reduced.

The 5 per cent best buy five-year fixed rate ISA from Yorkshire Bank and Clydesdale Bank was withdrawn on Tuesday, and the following day the five-year 4.6 per cent deal from Leeds Building Society was also pulled.

It's an unusual situation to see so many high-profile rate cuts and products withdrawn when we are barely a week into the current tax year, and this will have caught many savers on the hop.

Aside from the ISA rate cuts, it's been just as depressing in the wider savings market, with the competitive Halifax Web Saver bonds being cut by 0.2 per cent for the four-year deal and 0.25 per cent for the five-year option with rates now sitting at 4.05 per cent and 4.25 per cent respectively.

If you're looking to put some cash into any fixed rate savings account, don't hang about as these latest rate cuts are likely to cause a knock-on effect throughout the market in the next week or so.

Andrew Hagger is a money analyst at Moneynet.co.uk

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