Banks behaving badly: the latest tricks you should know about

As if slashing savings rates wasn't bad enough, high street banks are now tightening their current account belts.

NatWest and RBS are the latest two to ditch their in-credit interest rates on current accounts, following in the footsteps of Barclays, HSBC and the Co-operative Bank.

According to Moneyfacts, more than half of the current accounts on the market pay no in-credit interest on balances, and almost a third pay less than 0.1%.

Instead, these banks lure customers in with preferential rates on overdrafts, often allowing a generous interest-free buffer.

This week's best savings rates

Nothing in return

As most people bank with one of the bigger banks, it means monthly salaries miss out on a substantial chunk of interest.

And for the current accounts that do offer an in-credit interest rate, customers have to jump through a confusing set of hoops to earn anything at all.

Both Lloyds and Halifax offer 'reward' current accounts that pay a higher rate of in-credit interest, providing you pay in £1,000 a month and stay in credit.

But for basic current accounts, Lloyds pays zero on in-credit balances - and Halifax pays nothing on its standard current account.

Santander has also put an end to paying interest on in-credit balances for some of its current accounts.

To top this off banks are also edging towards paid-for accounts, with more so called 'packaged' accounts on the market than there are fee-free current accounts.

Paid-for accounts: are they worth the cost?

While packaged accounts aren't necessarily bad, they do charge customers a premium for 'benefits' they often don't use.

The general rule of thumb is to work out the benefits you are likely to use, check out their terms and conditions and how much they would cost if you paid for them separately. 

If you are likely to take advantage of three or more benefits then the packaged account could be a good option for you.

But watch out for unnecessary add-ons such as identity theft protection, which banks are obliged to provide anyway. 

Clearly banks haven't learned many lessons from the credit crunch and are still trying to take customers for a ride - make sure you're not one of them and keep a close eye on your accounts.

More about

Your Comments


Thank you for the information and it confirms that I must keep as little money in a current account as possible.
Towards that end I check my current accounts daily in the internet.



Norwich and Peterborough are the latest greedy ones - seems stopping interest on current accounts wasn't enough for them. Forcing customers to use their account as main account or pay them £5 a it's goodbye N & P and you'll lose my large 'free loan ' balance.

I cant remember the last time I had a current account that paid me interest.I'm satisfied with using the banks to take away the hassle of paying all the bills by using the direct debit facility.I always use a linked savings account to transfer all incoming money from my current account and leave a 0% balance.So the banks aren't getting to use my money without paying me interest and when the bills come in I just transfer money from my savings account into my current account to cover them.You have to keep on top of your outgoings otherwise you end up paying overdraft charges so I check my accounts everyday to avoid this.If I couldn't set up a linked savings account I would change banks.

I like my packaged account. I take advantage of free annual joint travel insurance, Mondial relay cover and mobile insurance from First Direct and these are well worth £12 a month to me. (I don't get commission for saying this!)
I get annoyed also that some of the larger banks like Natwest and LLoyds are selling the "new" features of their accounts like UK call centres and text banking (we'll tell you when you are running out of cash) etc. If you get with a good internet/phone bank like First Direct they have been doing this for at least FIVE years.
On the rare occasions when I need to phone them, the call is answered very promptly. I've been in a bank branch twice this year. Once when I had a large cheque to deposit and I didn't want to post it. The other time I was in my wife's branch and we waited 15 minutes for service. So there are good banks out there, if like me you are lucky enough to not need to pass bits of paper over a counter....

Yeah, the bank are really behaving that might let you go guessing for the next money trend. The time is now on the subject of planning your dollars and cents for 2012. These latest tricks will help you analyze the current state of the finance industry that may give you hint on better banking strategies. You can also follow these personal finance recommendations and you cannot go too far wrong. Find out more at: