Don't Let Bank Blunders Cost You Money

Can you trust your bank to pay you the right amount of interest? Be on your guard for slip ups.  

There's hot competition in the current account market these days with banks offering rates on credit balances that you would normally only expect to find on high interest savings accounts.

Today the market leader is Alliance & Leicester's Premier Direct Current Account which pays an impressive 8.5% on balances up to £2,500.

Lloyds TSB is going after you in a big way too. In the last three months, the bank has enhanced its current account range to lure in even more customers through its doors.

In June, the bank increased the interest rate paid on its Plus account range from 4% AER to 6% AER. Better still, existing Classic Account customers can now upgrade to a Plus account for free, allowing them to earn 60 times more interest than they were getting on the old, derisory rate of 0.1%.

And last month, the bank also introduced the new Vantage range as an add-on to new and existing current accounts with enticing interest rates for customers who keep a healthy balance.  

Bank blunders

This sounds like great news for bank customers. It's pretty clear Lloyds want your business and intends to up its market share even further. So you would think as the biggest current account provider in the UK -- and while peddling a series of attractive new accounts -- the bank would be running a slick operation. Not so. Despite these tempting rates, some customers have been short changed with interest underpaid in July and August.

The Fool was first alerted to the problem last week by a reader who noticed interest of just 33p had been credited to his Classic Plus account, instead of the £8 he should have earned.

Lloyds admit a glitch in the bank's systems was responsible for the error, which has affected a small number of its current account customers. The bank insists the blunder has now been rectified and all customers have been repaid the interest due, including a credit to cover interest on interest which should have been earned had it been applied correctly.

That may solve the problem as far as Lloyds is concerned, but these mistakes should never happen in the first place. Nor should they continue for a couple of months before being put right. It's thanks to eagle-eyed customers -- like our Fool reader -- that bank errors are uncovered sooner rather than later.

But who knows how regularly interest is underpaid without account holders even noticing?  My guess is more often than you would probably feel comfortable with. The problem is we don't tend to keep large balances in our current accounts, so discrepancies in relatively small monthly interest payments can easily slip under the radar.

Don't miss a trick

It's certainly worth your while giving all your bank statements a thorough once over to check everything is as it should be. If you come across a mistake, take it up with your bank right away. After all, what's the point in switching to a current account with a generous interest rate if you don't benefit from everything you're entitled to?

I'm not necessarily talking about losing vast quantities of cash here, but that's hardly the point. Don't let bank screw-ups leave you with anything less than you deserve.  

More: Watch Out For This Current Account Shake-Up| Compare current accounts at The Fool