Post Office extends current account roll out
The Post Office has extended its current account pilot scheme into the East Midlands and East of England.
While good news for Post Office customers wanting to open accounts, the extension - which sees current accounts arrive in 81 branches new branches in the two regions - still only means the products are on offer in 101 out of 11,500 branches.
However, at least customers wanting to open accounts in the East Midlands and East of Enland will be able to join those in East Anglia in being able to do so at their local branch. Staff will be able to assist with the completion of the application form as well as transferring direct debits.
There are three accounts to choose from at the Post Office, all of them provided by the Bank of Ireland UK.
The first is the "free in credit" Standard account, which has a minimum opening deposit of £100. Customers can request an overdraft at opening or anytime afterwards, and the overdraft interest rate is currently 14.9% EAR. There are no unarranged borrowing charges.
The second is the paid-for Packaged Account, which comes with a variety of extras such as travel insurance and breakdown cover for £8 a month as well as the overdraft options outlined above.
The third is the Control account aimed at customers who "are new to banking, potentially on lower incomes or who have had difficulty with default bank charges in the past". There is a fixed monthly fee of £5 but no further charges will be made for payments that are returned unpaid from direct debits and standing orders.
The Post Office said this could save them money as "customers who have incurred a bank charge are highly likely to then incur more, averaging at £205 per year". The account has a minimum opening deposit of £20.
A Post Office spokesperson told Moneywise: “We are delighted with our initial trial in East Anglia and the next natural step is for us to extend our branch reach, welcome more customers and gather further feedback. This way we can continue to ensure we listen to our customers and refine our product and service offering based on that feedback. We are still planning for a fuller roll-out in 2014, and this January expansion will stand us in good stead to develop those plans.”
However, Kevin Mountford, head of banking at MoneySuperMarket, said: “The Post Office announcement that it is extending its current account pilot across East Midland and East of England, making its three accounts available in over 100 branches is good news for customers who have access to those branches.
"However, while it is disappointing that the national roll-out isn’t happening a quickly as anticipated, the Post Office is clearly making sure that the account roll-out is done in a controlled manner as making it nationally available in all of its 11,500 branches in one go could cause them problems in fulfilling the expected high demand. I would expect further roll out of Post Office current accounts to other regions over the coming months."
A recent report by Mintel in October 2013 found that 41% of customers planning to or thinking of moving from their current bank following the introduction of the seven-day switching service would consider switching to the Post Office. Reasons cited were that it offered value for money products and is a trusted brand on the high street.
Anyone living outside the areas covered by the pilot scheme but wanting to open a Post Office current account can register their interest online at postoffice.co.uk/currentaccounts/register.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.