Go Direct News Moneyfacts.co.uk - weekly update 4.7.07

24 Nov 2024

Specialist UK Mortgages...

Moneyfacts.co.uk - weekly update 4/7/07

Moneyfacts.co.uk team comments on:

Lloyds TSB upping its foreign usage fees
HSBC’s new green current account option
Alliance & Leicester raising its recommend a friend incentive
New best buy credit card from Halifax
Sainsbury’s Bank cutting loan rates
Bradford & Bingley’s new account range
Branch based accounts back in vogue?

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Michelle Slade, Analyst at Moneyfacts.co.uk – the money search engine, comments:

Lloyds TSB increases foreign usage charge

“Lloyds TSB has announced that it will be increasing the foreign usage fee on its debit card, not the news that their customers preparing for their summer holidays will want to hear. With effect from 30 July all Lloyds TSB debit card customers will be charged a 2.99% cash or retail conversion charge – the highest on the market.

“Many customers using their card overseas are unaware of when and how much they will be charged. The jargon used to explain the charges can be confusing and often it is not until they get home and the damage has been done that the consumer realises the true cost of their holiday spending.

“For anyone looking to use their debit card regularly overseas, the Nationwide BS card is well worth considering, especially if they are a regular overseas traveller. The Nationwide BS debit card is the only card not to charge any fees for either cash or retail transactions overseas and so could save them a fortune in the long run.”

HSBC’s current account goes ‘green’

“This is a great idea. Not only is it simple, non intrusive and free, it looks to address the cause rather than throwing money at a symptom.

“Any new or existing current account customer can choose to switch to a green option. The deal offers customers a variety of discounts on green deals, makes a £5 donation to WWF, Earthwatch and Climate Group when an account is opened before 26 August and converts the account to paper free, meaning there are no statements, chequebooks, paying in books, letters or direct marking.

“The only slight drawback may be that the removal of a cheque book option might be a step too far for some customers. While cheques are certainly on their way out, there may still be occasions when they offer the most convenient form of payment.”

Alliance & Leicester increases its recommend a friend incentive

“Perhaps as a response to the growing competition in the current account market, more recently from the likes of Halifax and Abbey, Alliance & Leicester has increased its ‘recommend a friend’ incentive to £50.

“For some time now Alliance and Leicester has operated a recommend a friend scheme, but over the past few months this incentive has been fluctuating, recently falling to £30. The deal applies to Premier Direct or Premier account holders who ‘recommend a friend’ for the same account; once the account has been completed, the new account holder and their ‘friend’ will each receive £50.

“The Premier Direct account was awarded Moneyfacts.co.uk best current account for credit and debit interest rates in 2007 and has consistently offered a great deal during the last couple of years. Offering best buy credit and debit interest rates, combined with this increased incentive could prove an extremely tempting offer.

New best buy credit card from Halifax

“After a recent shake up of Halifax cards, with the drastic shortening of some 0% deals, Halifax has turned its attention to the standard rate market. The Flat Rate MasterCard is available online with a standard purchase rate of 8.9% - this is marketing leading.

“Perhaps for those rate tarts who have run out of options, or for those who simply cannot be bothered to continue to switch cards on a regular basis, a low standard rate could be ideal. The 8.9% is a competitive rate even when compared with many personal loans, especially if your borrowing is less than £5K.

“However, don’t be caught out as there are two versions of the Flat Rate Card. The MasterCard version is available online, with a rate of 8.9%, but apply in the branch and you will be offered a Visa card at 14.9%. That’s a huge price to pay for applying in branch, especially when you consider both rates are subject to your credit rating, so the rate you actually pay could be much higher.

Sainsbury’s Bank cuts its loan rates

“The announcement from Sainsbury’s Bank to reduce its loan rates to 6.50% bucks the current trend of rising rates we have been witnessing. With higher base rate and bad debts provisions to contend with, most lenders have increased their personal loan rates over the last few months, with sub-six percent loans a thing of the past.

“While this reduction and underlying rate may seem great news, it must not be taken at face value.

“Whilst a rate of 6.50% is competitive, it is still far from a best buy rate, with MasterLoan still topping the charts with an impressive 6.10%.

“Also be careful if you opt for the lender’s payment protection insurance. When compared with similar products on the market, the Sainsbury’s deal doesn’t fare very well.”

Rachel Thrussell, Head of savings at Moneyfacts.co.uk – the money search engine, comments:

Bradford & Bingley’s new account range

“Bradford & Bingley has performed a major revamp of its savings range, withdrawing accounts such as First Choice, Premier Saver, Premier Tracker and Premier Additions and replacing them with new accounts with differing rates and terms.

“While overall the savings range is pretty competitive, the Everyday Saver account, launched to replace First Choice, should have no place in today’s savings market.

“The account is designed for entry level savers, and once a larger balance has been accrued the saver may have the option to upgraded to a ‘better’ paying account. But what a way to entice savings – offering a maximum return of 1.55%, and that’s on a balance of £25K. The account will also pay a 0.50% bonus if no more than three withdrawals are made in a three-month period.

“With accounts such as Sainsbury’s Bank paying a market leading 6% on balances from £1, it seems highly unlikely that many people will opt for this account. It is fair to say that many institutions will have a ‘poorer’ paying account within their range, but why continue to offer such accounts to new customers? It’s certainly not much of an incentive to get people to start saving and won’t help increase the latest ONS figures, that revealed that the UK household savings ratio has slipped to a 50-year low.

Branch based savings are back in vogue

“As part of the Bradford & Bingley revamp, the What IF? Saver was launched paying a best buy rate compared with other branch-based accounts of 5.50% (min deposit £2K). The rate includes a 0.50% bonus for the first 180 days, and only permits four free withdrawals per year.

“Also this week saw the launch of Stroud & Swindon BS Branch Reserve account, paying 5.00%. This account requires a minimum investment of £3K and allows three free withdrawals per year.

“Perhaps branch based accounts are coming back in vogue, whilst direct channels such as the internet, telephone and post offer the most cost effective way for institutions to administer accounts. However, and importantly from the institutions’ perspective, they don’t offer the same cross-selling opportunities as sitting face to face with a consumer in a branch.

“For savers who, for whatever reason prefer to use a branch, it’s welcome news that they’ve not been forgotten and are being rewarded with better rates.”

NOTES TO EDITORS:

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