Earn 8.5% Interest In Your Current Account!
Some whacky deals from your bank: earn 8.5% interest for more than a year, and get a £200 cash payout in six months!
Alliance & Leicester yesterday announced that new customers would get a much better interest rate on money you put in its current accounts. It's raising the rate from 6.5% AER to 8.5% AER on the first £2,500 in the account. This fixed-rate deal lasts until the end of April next year. You must pay in £500 per month to get it.
So, if you deposit £2,000 into your account each month, basic-rate taxpayers can expect to receive about £70 in interest by the end of the year. (The exact figure will vary depending on when you pay your bills.) Higher-rate payers should receive about £50.
Of course, if you recently switched you won't earn a great deal more interest than you're getting now, so it's probably not worth it. I'd say it's worth switching to this one if you've had your account for many years, because you're probably earning just 0.1% interest each year, which is basically nothing!
What to expect
Lots of cross-selling of other products! I think that Alliance & Leicester is taking a leaf out of Halifax's book, which does a great job of pushing other products. So the high rate of interest is a bribe is to get you to listen to them. These cross-sold products will not be cheap. They never are, so shop around.
Watch out for the end of the deal in April next year. Firstly, the excellent rate disappears. Secondly, the 0% interest overdraft disappears too, as Alliance & Leicester starts charging 50p for every day you use it (up to £5 per month).
I suggest, as always, that you read and understand the small print. There are likely to be further catches.
There is a customer-services question mark, too. I've read a few complaints about this bank in emails and on our discussion boards. Perhaps the sample of complaints isn't big enough to be significant, but there has been enough negative feedback on service for us to be wary.
If you're like me and you do everything online you should be fine with this account, I think, because I don't remember reading any messages about poor online service. If you are a more heavy user of your banks facilities, perhaps you might go for one with a better reputation.
My favourite deal ever!
OK, it's not the best deal I've ever seen, by a long shot, but it's my favourite because it's the most amusing. One crazy bank is offering £100 to new customers for joining them, and another £100 to leave them again six months later! That bank is First Direct, which is owned by HSBC.
With this account you must pay in at least £1,500 per month, or own another First Direct product (e.g. a savings account or credit card, although it's not awfully necessary to actually use these second products, as they won't be the best!).
You're offered £100 for leaving, because First Direct claims you'll like them so much you won't want to do so. On the website it merely says that, for the second £100, you must close the account and transfer your direct debits to another bank after six months but before 12 months. I'd read the terms and conditions of both £100 offers carefully as soon as you receive them in writing, to ensure you request da monies on time.
With £100 tax-free you will probably do better than you otherwise would in any other current account. If you leave again in six months then you'll do far better, perhaps even more so if you bag another introductory payment for your next bank!
You may not want to switch again though. First Direct gets more positive feedback than most banks. Readers seem to be happy with its online service. But, if you stick with it, one catch is that you'll never receive a penny's credit interest with this account at a loss of, perhaps, hundreds of pounds over ten years.
Please comment on this article below: let people know what you think of your bank.
> Compare current accounts and savings accounts.