The naughty bank trick that may cost you £100

1.8 million customers are about to become members of another bank without realising, and it could leave them poorer.

With all customers from NatWest's Scotland branches and all customers from Royal Bank of Scotland's England and Wales branches automatically being transferred to Santander after a 318-branch buyout forced on the combined Royal Bank of Scotland Group by the European Commission, it might amaze you how little the two companies want to talk about the deal.

Yet Santander doesn't want to talk about it. As far as I can see, its prolific UK press room hasn't written a single press release on it. Royal Bank of Scotland, too, hasn't tried to sell the loss of branches as a positive for the business.

The reason is simple (but the effects on customers aren't – I'll come to that shortly). Customers can choose to remain with Royal Bank of Scotland or NatWest, but they have to contact Santander before being switched in the next 12-18 months. Santander naturally prefers to keep as quiet about that as possible.

Royal Bank of Scotland and NatWest, on the other hand, aren't allowed to do anything to try to keep customers, under the terms of the deal. Hence, if they do try some tricks to keep you, they won't be doing it so obviously through a press release.

All customers must take action

Let's start with current accounts.

Santander's deal for new current-account customers is a £100 joining bonus and 5% interest fixed for a year on positive bank-account balances up to £2,500 with its Preferred In-Credit Rate Account. If you average £1,250 in your account, that'll be about £63 after a year, on top of the £100. This is much better than existing customers will be getting at RBS Group.

However, it's unlikely that former RBS Group current-account customers being shifted to Santander will be given this top deal automatically, because Santander's payments to the potential 1.8m customers would likely be in the hundreds of millions over 12 months. More likely you'll get no joining bonus and zero, or close to zero, interest. That's what RBS Group is paying most of you now, too.

Santander will probably just offer this top deal to the customers who contact it to inform it you don't want to be moved from NatWest or RBS. Then it would pay to get your business. If you're interested in the Santander deal, you'll have to take action yourself and not wait to be moved automatically.

Alternative bank accounts

First Direct, a subsidiary of HSBC, also pays £100 if you switch to its 1st Account. Although it pays no interest, it has a much better reputation for customer service than Santander. Indeed, it is recognised as the best, winning countless awards for its customer service, as detailed in The UK’s favourite bank account.

If you prefer to earn interest and you have some savings, you can get an excellent interest rate of 4% with Lloyds TSB's Classic Account with Vantage if you keep between £5,000 and £7,000 in your account. If your average balance is £6,000 that'll be about £240 at the end of the year.

However, as far as I can see this interest rate could be reduced at any time. If you have that much money and want a more guaranteed way to earn roughly that much over a year, you could get the Santander account and keep it credited up to £2,500 combined with a top savings account with a good guarantee for the excess savings.

To get those benefits in any of these current accounts you need to keep paying in £1,000 each month, or £1,500 in the case of First Direct.

What'll happen to your mortgages?

If you have an introductory or long-term mortgage deal with Royal Bank of Scotland or NatWest, Santander won't be able to change the contract terms for the worse when it takes over. However, customers on standard variable rates could be put on Santander's SVR.

It may be that Royal Bank of Scotland Group will reduce its SVR in order to entice customers to take steps to stay with it. That may even start a price war with Santander. But we're getting ahead of ourselves. It's too early to say what the difference in SVRs will be when the shift occurs.

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At the moment the difference is small, although it could leave you a few hundred pounds poorer a year if you let your mortgage move over to Santander naturally. You might not think much of a couple of hundred in the context of the thousands you pay for your mortgage, but that is a common error. After all, you'd be very pleased if you found £200 in the street, so do you want that £200 or don't you?

As an alternative to either SVR your obvious choice is one of the ultra cheap tracker mortgages out there. Many people are going for two-year fixes, although I feel they're unsuitable for the majority of people. I think you should consider also very long-term fixed-rate mortgages, if it's appropriate for your circumstances. I wrote why they're under-rated in Pay 5% on your mortgage for a decade.

Personal loans

If you have a personal loan from an affected NatWest or RBS branch, it's probably on a fixed interest rate. Santander won't be allowed to increase that if it takes over or make the terms and conditions worse.

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