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RBS customers banned from rival ATMs

If you hold an RBS or NatWest current account, you could see the number of cash machines that you are able to use slashed over the next two months...

As far as money myths go, the cash machine noise story is a good one.

The tale first appeared on a design website back in June and claimed that the ‘whirring’ noise made by automatic teller machines (ATMs) before they dispense cash is actually fake. Yes, according to Humans Invent the sound is generated by speaker to reassure the customer that their money is on the way.

However the claim was quickly discredited when several ATM engineers replied to the article and rubbished the story.

The site is now attempting to confirm if the motors inside ATMs are tuned to make a certain sound when dispensing cash. But whatever the truth in this tall tale (very little, I would wager), it’s undeniable that ATMs play an important part in most people’s financial lives. Which is why RBS’s recent announcement concerning them should be of prime concern to the bank’s customers...

Punishing the poorest

Royal Bank of Scotland (RBS) is to ban basic current account customers from using cash machines owned by rival banks. The change will also affect holders of no-frills banks accounts with NatWest, a subsidiary of RBS.

Basic bank accounts are intended for financially vulnerable people with low incomes and patchy credit scores. Banks began introducing them in the last decade after considerable pressure from the government. They do not offer overdrafts or in-credit interest but play a vital role for many people who would otherwise not be eligible for a bank account.

Rachel Robson reveals some top tips for switching current accounts.

New RBS basic account customers are already barred from using rival ATMs. The ban for existing customers will come into force over the next few months.

The bank – whose parent company, the RBS group, is 84% owned by the government – has said that customers will still be able to use nearly 20,000 machines. Basic current account customers will only be able to withdraw cash from RBS, NatWest, Tesco or Morrisons ATMs or over the counter at the Post Office.

Rural customers with few cash machines nearby could be hit especially hard by the change.

ATM fees

RBS blamed the ban on the charges levied on them by the ATMs of rival banks. As we reported last year in How ATMs make money, cash machines charge card issuers a fee every time a customer uses their outlet.

The bank says that as it already runs basic accounts at a loss, it is unsustainable to keep offering ATM services with rival branches.

Lloyds TSB already restricts basic account customers from using ATMs it terms as ‘away’, while other banks have placed restrictions on the in-branch services available with no-frills accounts. Nationwide cashcard holders have to withdraw a minimum of £100 when they use counter services, while HSBC basic account customers cannot make cash withdrawals over the counter.

The change by RBS has also fuelled fears of a surge in independent machines that hit every customer with fees.

So what can you do if you find your ATM access cut-off over the next few months?

Switch out

A simple solution is to switch accounts. Many other banks offer basic accounts and – as I mentioned above, with the exception of Lloyds TSB – most will still allow you to withdraw cash from rival ATMs.

Here are a few of them:

Account

Interest (AER)

Overdraft

Santander Everyday Account

0%

Free arranged for 4 months when you switch to Santander

Barclays Basic Account

0%

On application – 19.3% interest pa

HSBC Basic Account

0%

On application – 19.9% interest pa

Nationwide Cash Card

0%

Not available

Obviously if you apply for an overdraft on a basic account, the bank will look into your credit history to decide whether to grant you this facility or not. And even then, the level of borrowing you will be offered will depend on your financial situation.

Alternatively, if you’ve managed to improve your credit history you may want to think about upgrading from a basic bank account to a deal that pays interest on your balance or offers a 0% overdraft. Although if you are planning on following this route, it’s a good idea to check your credit history before you start applying for accounts. Head over to our credit report centre to get a free report through Credit Expert – just make sure you cancel the service before the free trial period ends.

Here are some of the best current accounts around at the moment across the market:

Account

Interest (AER)

Overdraft

Need to know

Santander Preferred Account (£100 cashback when you switch)

5.0% for 12 months on balances up to £2,500 (1% after)

0% for 12 months (matched to previous OD up to £5,000 depending on circumstances)

Must pay in £1,000 per month and have at least two active direct debits/standing orders and use switching service to claim all the perks

Halifax Reward Account

£5 per month cashback

£1 per day (planned up to £2,500)

£2 per day (planned £2,500+)

£5 per day (unplanned)

Must pay in £1,000 per month

Co-operative Current Account Plus

0%

£200 at 0% or 15.9%

Must pay in £800 per month

Nationwide BS FlexAccount

0%

18.9%

 

Lloyds TSB Vantage

1.50% (£1+)

2% (£1,000+)

3% (£3,000 to £5,000)

£10 at 0%

Must pay in £1,000 per month

First Direct 1st Account

0% (£100 cashback and £100 if you leave within six months)

£250 at 0% or 15.9%

Must pay in £1,500 per month

As you can see, there are some good deals out there. But to get the very best interest rates and 0% overdraft lengths you will need to jump through a few funding hoops. The Santander Preferred Account obviously offers the best interest rate – paying out at 5% on balances up to £2,500. However as far as customer service goes, the Spanish bank’s record is chequered to say the least.

If you’re after top customer service you’d be better off plumping for either the Co-operative account or First Direct’s 1st Account – two banks with sparkling service histories. Halifax’s Reward Account is also a good bet if you’re not after an overdraft and can pay in at least £1,000 per month as you’ll receive £5 cashback every month.

And finally, before you take out any new current account make sure you take a look at this article and steer clear of The five biggest current account traps.

Is this fair?

What do you think of the RBS change? Should banks be able to charge you for withdrawing your own cash?

Have your say using the comment box below.

More: Compare current accounts | Ditch these current accounts – quick! | HSBC imprisons customer for her overdraft 

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Comments



  • 15 September 2011

    I don't understand the fuss to be honest. If you choose a bank that doesn't offer you all the services you want, then switch. Several alternatives have already been suggested for accessing cash in lieu of the appropriate ATM as an alternative to switching. So make your choice! In Europe, all transactions on accounts carry a fee, paying a direct debit, using a debit card, drawing from an ATM, carrying out a transfer...the bank levies a fee for the service. After all, that's what they're providing every time you carry out a transcation, its a service. We get off light in the UK by comparison. I certainly wouldn't be suprised if I enter Tesco's and they expect me to pay for a product or service, it's how business works! I also have the choice to shop elsewhere for a better price. It would appear banks are damned if they make a profit and damned if they don't. Quite frankly, I'd rather bank with a strong (self-funded, not Government supported) institution which makes a profit - profit means they will be around long after others have hit the wall, they'll most likely be at the cutting-edge of new developments which as a customer, I'll be able to take advantage of, they're also more likely to be able to offer me more competitive rates on my savings or mortgage if they themselves are in a strong position. And when did it become the banks' responsibility to hold your hand and point you in the right direction for their best rates "rippedoffslowly"? Whenever I visit my bank, their products are all over the place, leaflets, posters, staff to ask, in fact the staff often offer info to me! They even publish their rates in the financial press and provide T & C's with every account I've ever opened. People take no responsibility for managing their own affairs anymore. If I want the best rate, I look for it or ask the staff and I make sure I know when my promotional interest rates end so I can review and move as necessary. As per my previous example, Tesco's don't tell me that Asda's groceries may be cheaper when I buy, it's up to me to check! When did it become someone else's job to find me the best deal? Oh, wait, that service is available, it'd be through a financial manager or broker and you'd have to pay for it!! Suprisingly, considering my views, I don't work for a bank, I run my own business, reading this, I'm relieved I don't - there's certainly no pleasing some people!

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  • 30 August 2011

    I have banked with nat West for 30 years. There is not a branch in the town where I live but this has not been a problem. When my daughter started her part time job, she was paid by cheque. She is at school so I was able to arrange for them to open a basic bank account for her. Now, it would appear, she can't get her money out of the bank! I travel 40 miles each week to bank the money with parking hassle involved. I know it is a detour on a regular journey but I thought it would help if she banked at the same bank as me in terms of assisting her if she needed a mortgage etc, etc in later life. This is a very poor decision on their part as I am likely to go elsewhere taking my current account, ISA, deposit account and credit card elsewhere! Stupid bankers!

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  • 30 August 2011

    I do sympathise with rippedoffslowly but I have to say that he seems to have taken his eye of the ball. I transferred all of my ISAs to Nationwide some time ago and have them in 2 and 3 year bonds. The lowest interest I have had is 3.5% which compares favourably with the best of the rest. However, it does all depend on being able to commit to a 2 or 3 year period so, in that case I agree with every word he wrote. Nationwide is not alone in this as just about every bank and building society works on the same basis. All of my other accounts are with Barclays and, contrary to many other comments, I have always found them to be very reasonable and they have on several occasions contacted me to suggest that I should move funds to other accounts offering better interest.However, they have nothing to offer which competes with Nationwide.

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