M&S current account finally arrives
All accounts will receive an automatic overdraft facility of £500 with anything over £100 attracting a charge of 15.9% EAR - although no fees for unauthorised use apply.
"Putting it in hard cash terms if you make two debit card payments on the same day that put you into an unauthorised overdraft of £120 for three days, M&S Bank will charge you just 15 pence," explained Andrew Hagger of Moneycomms.co.uk.
"At the other end of the charging spectrum Lloyds Bank and TSB will both charge you £36.20, Norwich & Peterborough Building Society £49.18 and Nationwide Building Society (FlexAccount) £50.19 for the same short term oversight or indiscretion."
"Not only is this approach a breath of fresh air, but also the financial benefit for consumers is huge," Hagger said.
Bigger overdrafts also work out to be competitive. The annual cost of using a £600 overdraft seven days a month would be £18 with the M&S account, which the supermarket points out compares favourably to the £56.10 average across the market.
No interest is paid on in-credit balances but there is no ATM transaction fee for withdrawals abroad using the account's accompanying debit card. However, a non-sterling transaction fee of 2.75% applies.
Hagger said: "The M&S Bank decision not to charge for ATM cash withdrawals overseas helps put it in the top five cheapest accounts to use abroad along with Norwich & Peterborough BS, Nationwide BS and fellow challengers Metro Bank and Post Office."
He added that the charge M&S has waived could easily set back customers of Lloyds Bank, TSB, Santander and Halifax nearly £100 while on a two-week family holiday.
Customers using the Current Account Switch Service – which guarantees to switch your account between providers in just seven working days - will get a £100 M&S giftcard for moving to the new account.
They will also earn one loyalty point for every pound of their debit card spending that take place with M&S in-store and online. For every 100 points, they will receive £1 in M&S vouchers each quarter.
M&S Bank currently has the longest opening hours of any high street bank.
Hagger concluded: "There are plenty of positive aspects to the M&S Bank account and if it can maintain and build on its reputation for good value and good customer service its share of the UK current account market, along with fellow challenger banks, could grow rapidly over the next few years."
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.
Issued by a bank as part of a current account and, in a nutshell, serves as electronic cash. Unlike a credit or charge card, where you get an interest-free period before you have to settle the bill, the funds spent on a debit card are withdrawn immediately from your current account. Unless you’ve arranged an overdraft, if you don’t have the cash in the account, you can’t spend it.
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.
This is a mutual organisation owned by its members and not by shareholders. These societies offer a range of financial services but have historically concentrated on taking deposits from savers and lending the money to borrowers as mortgages, hence the name. In the mid-1990s many societies “demutualised” and became banks. One academic study (Heffernan, 2003) found demutualised societies’ pricing on deposits and mortgages was more favourable to shareholders than to customers, with the remaining mutual building societies offering consistently better rates. In 1900, there were 2,286 building societies in the UK; in 2011, there are just 51.