Money Line: More on Offer Than Big Four's Deals; CREDIT: Other Financial Institutions Pay More Interest and Charge Less for Overdrafts
Byline: Dave Watts
THE Big Four banks - Barclays, HSBC, Lloyds TSB and NatWest - have been heavily criticised in a report by a select committee of MPs.
Some 70pc of us bank with the Big Four, but they are not cast in a favourable light compared with what other institutions offer. The Big Four pay a measly 0.1pc interest on current account balances. By going elsewhere you could earn between 3pc and 4pc - 30 to 40 times as much. If you keep an average balance of pounds 500 in your account that can add up to a difference of almost pounds 20 a year in interest received.
And with authorised overdrafts the Big Four generally charge between 15pc and 18pc a year interest. By going elsewhere you could get this down to, say, 8pc or 9pc. That could save you up to pounds 50 a year in interest on a pounds 500 average overdraft.
So if you are one of the vast majority who are losing out big time by sticking with the big banks, isn't it time you considered changing? Most people don't. Indeed more get divorced each year than change their bank account. While most people are happy to switch car insurance companies each year and to remortgage their home to get a better deal, we are peculiarly reluctant to change banks. It is now supposed to be easy to switch banks with your new bank contacting your existing bank and making all the necessary arrangements for transferring automatic debits and credits to the new account. The process is supposed to take only five days but actually often takes longer. So which bank to move to? According to MoneyFacts, the financial information provider, Cahoot (www.cahoot.com, an internet bank owned by Abbey National) pays the highest interest on credit balances - 3.93pc (4.03pc if you don't need a cheque book). My wife has just opened an account with them and is very pleased with it. And they charge just 8pc on overdrafts.
Zurich Bank (www.zurichbank.co.uk, another internet bank) pays 3.5pc on credit balances and charges 9pc on overdrafts.
Intelligent Finance (0845 6094343) is run by Halifax and effectively links a current bank account to a savings account and any borrowing accounts you have with the bank - such as a credit card debt, personal loan or mortgage. It pays 3.15pc on current account balances and charges 9pc on overdrafts.
Alliance & Leicester (0500 959595) pays 3.1pc on its Premier account and agreed overdrafts are free for the first 12 months (you have to pay at least pounds 500 a month in to qualify for this account).
Insurance complaintsTHE Financial Ombudsman Service (FOS) has just warned insurance companies to keep better records of telephone conversations.
The FOS is the last line of appeal for consumers who consider that they have been badly treated by a financial service provider such as a bank, insurance company or investment adviser. …