Banking/Savings Section

Which? Batters The Banks - Save Money & Do Something About Your Personal Banking

July 2005

The magazine Which? has just published a not surprisingly negative report on the banks, accusing them of charging very high prices for many services combined with promoting unnecessary products.

But how can they get away with this year on year? Simple, the banks rely on their best friend, customer apathy. Most customers can't be bothered to switch accounts or search out better and cheaper products. But with the advent of the internet and cut-throat competition taking your business elsewhere has never been easier or simpler.

Watch Out For These Banking Products/Services & We Offer Some Solutions

Packaged Accounts

• Accounts which charge a monthly fee for additional services
• Be very sceptical about the actual value of what's being offered
• For example, they often include travel insurance which can usually be bought for 50% of the value if you shop around on the net

Solution: Consider a Best-Buy bank account and shop around for services such as travel and car break-down insurance you'd be surprised at how much you can save

Payment Protection Insurance (PPI)

• A major money maker for the banks running into billions in profit each year
• Hard selling these policies is rife and many of them are actually worthless

Solution: If you must have PPI insurance then read this InvestorProfit article as it tells you where to get cheap policies - Click Here for the article

Using Your Cards Abroad

• Pure skimming by many of the banks
• Banks love to levy surcharges of between 1.5%-2% ON TOP of foreign exchange loading charges of up to 2.75%
• For example, at today's rate withdrawing 200 Euros (via debit card) with Halifax costs £142 and Barclays £139.32
• But The Nationwide doesn't levy surcharges on their Debit cards when used abroad so the 200 Euros costs just £135.25

Solution: If you spend a lot of money abroad or holiday often consider opening a Nationwide account

ID Theft Policies

• The threat of ID theft has been overblown by the media (makes a good story) and the financial institutions who've worked out how to make money off it
• Which? reserves a special prize for the 'most useless financial product' to the Halifax for its ID theft insurance!

Solution: Read this LearnMoney.co.uk article to take the necessary steps to avoid the threat of ID theft and don't buy insurance policies - Click Here for the article

Card Protection

• This trick is actually incredibly cynical with consumer groups complaining it's a complete waste of money
• The Credit Card insurance costs around £25 a year and protects you against financial loss if your card(s) are lost or stolen and big bills are then run up without you knowing
• On its own this type of policy looks a sensible bet, BUT.........
• The banks are obliged by law to provide this protection for free anyway!
• Under the Consumer Credit Act the maximum you'll be liable to pay is £50 (and very often it's zero) provided you notify your bank of the card loss (interestingly this is also a condition of the insurance policy)

• Solution: As a rule of thumb if you're offered ANY insurance by a financial company refuse it because at best it's likely to be very expensive and at worst a complete con, case in point in this Card protection

Unauthorised Overdrafts

• Another major money spinner for the banks and the fees are nasty and often getting worse
• Fees of £30+ alongside £35+ for returning unpaid direct debits/cheques are not uncommon

Solution: Twofold, don't be afraid to complain and kick up a real stink, this often works well, and secondly consider moving your account to a bank like Smile (comes top in the Which? survey) which pays 3.3% on credit balances and offers a free £500 overdraft buffer fixed at a not unreasonable 9.9%

Which? also scored well First Direct & The Nationwide bank account

See Also

• How to get cheaper PPI insurance - read this article
• The Nationwide offers NO Surcharges on ATM money abroad
• ID Theft article - The problem is not that bad & how to protect yourself for FREE
• Best Buy Bank Accounts - Say NO to your greedy bank and open an account that offers a good deal. The Which? top scorer is Smile but First Direct & The Nationwide also do well