Your bank is only interested in making as much profit from you as it can. Here are ten easy ways to keep your cash out of their coffers.
Most banks have a pretty dubious reputation when it comes to treating customers fairly, and providing good value for money. In fact, they usually rely on your apathy or misplaced loyalty for boosting their profit margins.
With that in mind, here are ten easy ways you can keep your bank's grubby mitts off your money:
1. Switch
Getting a rough deal from your bank? If you are, deal them a fatal blow by switching to a rival so they'll never be able to profit from you again. Luckily, current account switching is no longer the onerous task it once was and, even better, there are some great accounts on the market today. Check them out below:
|
Bank |
Account name |
Rate paid on in credit balances |
Overdraft rates |
Conditions |
Freebies |
|
0.5% up to £2.5K, 0.1% above £2.5K |
0% for 12 months then 50p per day capped at £5 |
Must pay in £500pm + |
£100 cashback using A&L Switching Service. Free multi-trip European travel insurance. |
||
|
5% fixed up to £2.5K for a year, then 1% thereafter. 0.1% above £2.5K |
0% for 12 months then 50p per day capped at £5 |
Must pay in £500pm + |
None |
||
|
£5 reward each month £1K is credited |
£1 a day up to £2.5K, £2 a day over £2.5K. |
Must pay in £1Kpm + |
None |
||
|
Balances of £4K to £7K earn 4% |
18.9% |
Must pay in £1Kpm + |
None |
||
|
0.1% |
0% for 12 months, then 12.9% |
Must pay in £1Kpm + |
None |
||
|
5% fixed up to £2.5K for a year, then 1% thereafter. 0.1% above £2.5K |
0% for 4 months, then 19.9% |
Must pay in £1Kpm + |
None |
2. Never pay for a packaged account upgrade
Packaged current accounts are big business which could set you back anything from £5 to £25 a month in return for freebies including AA breakdown cover, travel insurance and mobile phone insurance. But I think they offer most of you very poor value, particularly if you don’t make use of all the benefits on offer. Read Ditch these awful current accounts to find out more.
If you’re offered an upgrade, don’t be pressured into saying yes. After all, banking should be free - just like all the great accounts shown in the table above.
Recent question on this topic
- barbara legge asks:
I am incensed that as a customer of longstanding with Nationwide BS, I requested a free temporary overdraft and was told it was only for new customers
- MikeGG1 answered "I seem to recall a whole series of TV ads from Nationwide about how other banks put new customers..."
- JoeEasedale answered "No one will offer £6000 free. Having said that, having lots of money in an account that pays..."
- Read more answers
3. Don’t pay interest on your credit card
Quite simply, i?f you have a credit card from your bank, make sure you pay your balance off in full every single month without fail. This is the only way to avoid get stung by interest charges. Of course, take advantage of interest-free introductory periods on purchases or balance transfers by all means, but never let the typical APR kick in.
4. Apply for a cashback credit card
Even better, apply for a cashback credit card so you can start making money out of the banks rather than the other way round. With one of these cards, every time you spend you'll earn a little cash bonus. The American Express Platinum Cashback card, for example, is a great choice which pays 5% cashback in the first three months (up to a maximum of £100) with rates of between 0.5% and 1.25% depending on how much you spend after that.
5. Borrow somewhere else
If you need to borrow for a larger purchase, your bank’s personal loans may not be particularly competitive. In fact, if you would rather not borrow from a bank at all, there is an alternative - Zopa. Zopa is an online peer-to-peer lending business which enables you to borrow from other people at decent rates, completely cutting the bank out of the loop.
Find out more in this video:
Ed Bowsher takes a look at Zopa, an interesting alternative to the high street banks
6. Avoid rubbish savings accounts
If you’re sick of getting a dismal return on your cash, Zopa could help out here too. By lending money to other people, you can earn a really impressive rate. In fact, in the last 12 months lenders have enjoyed an average return of 8.2% pa (after fees, but before bad debt).
Before you consider Zopa, bear in mind that by lending money it will be tied up to begin with and gradually made available to you as the debt is repaid by the borrower. Bad debt rates are low, but your cash will be spread over at least 50 borrowers to reduce the risk of default. Find out more here.
7. Don’t buy insurance policies from your bank
Don’t help your bank to boost its profit margins with over-priced insurance policies. You’ll only get real value for money on home, travel and life insurance if you shop around. Settle for the plans on offer from your bank and you could end up paying well over the odds.
Luckily, you can compare different plans easily using the lovemoney.com insurance comparison tools - just use the links shown above.
8. Get your holiday money somewhere else
If you order currency from your bank, you almost certainly won’t get the best rates. True, they may not be quite as bad as buying direct from a bureau de change at an airport, but I doubt you’ll get a competitive deal nevertheless. After all, an online travel money website should always provide better value than the high street.
To shop around for better currency exchange rates, try CurrencyExchangeUK or CompareTravelMoney instead.
9. Don’t pay your bank commission for advice
Your bank will make big bucks if you take advice from them and then buy into their range of investment products. In fact, you’ll effectively be charged twice by shelling out for commission to the adviser and fees for managing your investment. As if that wasn’t bad enough, most banks’ investment plans aren’t much to write home about anyway.
If you need investment advice, get help from an independent financial adviser who isn’t tied to one bank’s products.
10. Remember loyalty never pays
Remember in the banking world, loyalty never pays, but shopping around does!
Compare current accounts at lovemoney.com
More: Four banks that are trying to suck up to you | Three banks that treat their customers well