Abbey's New Banking Account - It's OK But There Are Better
September 2005
One of our biggest bugbears with personal finance products is that they tend to be made with too many strings attached, and hence give the waft of trying to con potential clients. And Abbey is no different with its new bank account.
What Is The New Abbey Bank Account
- A current account that pays 6% interest BUT with catches
- The account pays 2.5% interest on cash balances but adds a 3.5% bonus (only on cash up to £1,000) after 12 months
- On balances over £1,000 the interest rate is 2.5%
- The account is only open to people who will pay in at least £1,000 a month and the account closes for new business in December 2005
- Standard overdraft rate is 16.9% although people who are regularly in the red can opt for a cheaper overdraft rate of 9.9% but then the interest rate offered on cash balances will only be a pathetic 0.1% after 12 months
Summary Of The Abbey Account
If you're currently earning 0.1% on cash balances at your bank (which most bank accounts pay) then it's a pretty good deal. We don't however like the bank advertising '6%' and then forcing customers to wait 12 months till it kicks in. A classic example of using the headline rate to attract business. Although it's clear what and when customers will get the benefits we'd still prefer things to be simple from the start.
For those who want a better current account deal then the Abbey account can easily be beaten, read on.
Alliance & Leicester Bank Account Trumps The Competition
This really is a superb bank account and consumers should look at what it offers before deciding to bank with anybody else.
- The name has been changed from Premier Plus Account to Premier Direct
- Standard overdraft rate is now 5.9% (This cannot be beaten anywhere)
- AND customers get an interest free overdraft for the first 12 months, up to an agreed limit
- Minimum monthly deposit of just £500 a month
- Interest on cash balances is fixed at 5% (up to a £2,500 balance) for the first year, then it would fall to 1% below the current base rate
- Note that the Premier Direct account is an online and telephone banking account
- Alliance & Leicester Premier Direct - Signup online & get a FREE £25 cash bonus
Summary Of The A&L Premier Direct
Look no tricks! What you see is what you get with this account, everything is easy to understand from the word go. Alliance & Leicester should be commended for not only offering a real money-making and money-saving account to consumers, but also marketing it without any tricks.
Therefore go with A&L for the best current banking account available especially if your current bank pays you 0.1% on cash balances and/or you're regularly overdrawn.
Switching Bank Accounts Is Easy
Banks these days will automatically switch all your direct debits and standing orders directly so moving an account is both easy and simple. Just make sure you take 2 forms of ID (plus a utility bill or previous bank/credit card statement with your address on) when you open a new account to prove who you are and for money laundering regulations.
Summary
Realise that there's an 80% chance that your current bank is only paying you 0.1% on cash balances and if you go overdrawn you're most probably being charged hefty fees. So moving to an account to any bank that pays 3% or more in interest alongside offering better overdraft rates can be a real money maker and/or saver.
You're therefore throwing money down the drain if you don't switch, and switching can be done with virtually NO hassle. The end result can easily be a few more hundred pounds in your pocket at the end of the year.
See Also
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