Money Insider: Which bank will be a credit to customers?

This week M&S Bank launched a mass market current account, another example of challenger banks offering customers a credible alternative to the often criticised high street banks.

There is no single current account that works out best for everyone, so it's worth looking at the individual key components to see how the banking players, old and new, stack up.

Agreed overdrafts

It's difficult to pinpoint the cheapest overdraft as it depends on how much and how long you're in the red each month, but if you use an overdraft of £400 for only four days each month, the total annual cost is less than £10 with First Direct, M&S Bank, Post Office, Metro Bank and Nationwide Building Society FlexAccount.

Compare this with a yearly bill of around the £80 mark for the same borrowing scenario with Lloyds Bank (Club Lloyds), TSB Classic Plus and NatWest and RBS Select.

Unauthorised overdrafts

M&S Bank has boldly decided that for unauthorised borrowing you will simply pay the same interest rate as per your agreed overdraft at 15.9 per cent EAR with no paid referral fees, unpaid fees or daily or monthly charges.

Unauthorised bank charges may be a useful revenue stream for the banks but the flipside is that they simply upset and alienate those customers whom they worked so hard to attract in the first place and pretty much destroy any chance of future loyalty.

Putting it in hard cash terms, if you make two debit card payments on the same day that put you into unauthorised overdraft by £120 for three days, M&S Bank will charge you just 15 pence.

At the other end of the charging spectrum, Lloyds Bank and TSB will both charge you £36.20, Norwich & Peterborough Building Society £49.18 and Nationwide Building Society (FlexAccount) £50.19 for the same short-term oversight or indiscretion.

Debit card charges abroad

The M&S Bank decision not to charge for ATM cash withdrawals overseas helps put it in the top five cheapest accounts to use abroad, along with Norwich & Peterborough BS, Nationwide BS and fellow challengers Metro Bank and Post Office.

A typical family holiday scenario could easily set you back nigh on £100 in charges with Lloyds Bank, TSB, Santander and Halifax.

Credit Interest

There's no credit interest payable with the new M&S Bank account – or with Metro Bank or Post Office.

But it's interesting to note that the banks that are offering the top deals for in credit interest/rewards (Lloyds, Halifax and TSB) are also the most expensive for debit card charges abroad and at the more expensive end of the table for overdraft costs, so it's akin to robbing Peter to pay Paul.

Customer service

Good customer service is essential if new banks want to attract new customers year after year, and it's an area where the challenger banks have a real opportunity to differentiate themselves from the patchy and mediocre service offerings from the established banks.

M&S Bank (23rd) and Post Office (92nd) were two of only eight financial players to appear in the top 100 brands in the latest Nunwood customer experience excellence results.


There are plenty of positive aspects to the M&S Bank account, and if it can maintain and build on its reputation for good value and good customer service, its share of the UK current account market, along with fellow challenger banks, could grow rapidly over the next few years.

Andrew Hagger is an independent personal finance analyst from

Independent Partners; request a free guide on NISAs from Hargreaves Lansdown

peoplePaper attempts to defend itself
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    IT Project manager - Web E-commerce

    £65000 Per Annum Benefits + bonus: Clearwater People Solutions Ltd: If you are...

    Trainee / Experienced Recruitment Consultants

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree are a global FTSE 250 ...

    Trainee Recruitment Consultant - Soho

    £20000 - £25000 per annum + OTE £40000: SThree: As a Recruitment Consultant, y...

    Trainee Recruitment Consultants - Banking & Finance

    £20000 - £25000 per annum + OTE £40,000: SThree: SThree Group have been well e...

    Day In a Page

    Secret politics of the weekly shop

    The politics of the weekly shop

    New app reveals political leanings of food companies
    Beam me up, Scottie!

    Beam me up, Scottie!

    Celebrity Trekkies from Alex Salmond to Barack Obama
    Beware Wet Paint: The ICA's latest ambitious exhibition

    Beware Wet Paint

    The ICA's latest ambitious exhibition
    Pink Floyd have produced some of rock's greatest ever album covers

    Pink Floyd have produced some of rock's greatest ever album covers

    Can 'The Endless River' carry on the tradition?
    Sanctuary for the suicidal

    Sanctuary for the suicidal

    One mother's story of how London charity Maytree helped her son with his depression
    A roller-coaster tale from the 'voice of a generation'

    Not That Kind of Girl:

    A roller-coaster tale from 'voice of a generation' Lena Dunham
    London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

    London is not bedlam or a cradle of vice

    In fact it, as much as anywhere, deserves independence
    Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

    Vivienne Westwood 'didn’t want' relationship with McLaren

    Designer 'felt pressured' into going out with Sex Pistols manager
    Jourdan Dunn: Model mother

    Model mother

    Jordan Dunn became one of the best-paid models in the world
    Apple still coolest brand – despite U2 PR disaster

    Apple still the coolest brand

    Despite PR disaster of free U2 album
    Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

    Despite the result, this is the end of the status quo

    Boyd Tonkin on the fall-out from the Scottish referendum
    Manolo Blahnik: The high priest of heels talks flats, Englishness, and why he loves Mary Beard

    Manolo Blahnik: Flats, Englishness, and Mary Beard

    The shoe designer who has been dubbed 'the patron saint of the stiletto'
    The Beatles biographer reveals exclusive original manuscripts of some of the best pop songs ever written

    Scrambled eggs and LSD

    Behind The Beatles' lyrics - thanks to Hunter Davis's original manuscript copies
    'Normcore' fashion: Blending in is the new standing out in latest catwalk non-trend

    'Normcore': Blending in is the new standing out

    Just when fashion was in grave danger of running out of trends, it only went and invented the non-trend. Rebecca Gonsalves investigates
    Dance’s new leading ladies fight back: How female vocalists are now writing their own hits

    New leading ladies of dance fight back

    How female vocalists are now writing their own hits