I had high hopes when Marks & Spencer announced it was going to expand its banking division earlier this year. With consumer faith in banks at an all-time low, a trusted high street retailer could really set the sector on fire.
Sadly, M&S has disappointed. Rather than wade in with an open, honest bank account that would appeal to the masses it has launched a Premium Current Account that will cost you £240 a year.
Premium or packaged bank accounts, as these extortionate accounts are known, were created as a profit-making exercise by the banks. They charge you upwards of £200 a year for a collection of benefits that you could find at a far lower price elsewhere.
Entering this market hasn’t made M&S stand out as a new trustworthy face in banking, it has shown the company to be jumping on the profit bandwagon along with the high street banks.
And don’t worry, I’m not attacking M&S without checking my facts first. I’ve gone through the perks of its account and they certainly don’t outweigh the cost.
In return for handing over £240 a year, you’ll get retail vouchers, a birthday gift, “seasonal treats and delights”, travel insurance, and loyalty points when you buy M&S products with your debit card.
In terms of banking perks, you’ll get a £500 overdraft with the first £100 interest-free, no unauthorised overdraft fees, no charges for withdrawing cash abroad, and access to a regular savings account paying 6% interest.
M&S values all these perks at £582. But when you look at how it has come to that figure it’s hard not to laugh. The bulk of it is £245 for a worldwide, family multi-trip travel insurance policy, including winter sports. Sounds good, but a quick hunt round reveals you could get a similar policy with an excellent level of cover for under £100.
The next biggest value perk is 48 hot drinks vouchers for the M&S Café worth £127. After that you get a £10 birthday gift, £40 of M&S vouchers a year and four ‘treats and delights vouchers’ a year worth £45.
As for the interest-free overdraft, £100 puts M&S pretty low down on the best-buy tables. And until it releases more details of its charging structures, in other words, how much you are charged for using your debit card for payments abroad, it’s difficult to assess the value of the other banking perks.
So strip out the insurance, which you could find far cheaper elsewhere, and the only decent perk left is the regular savings account, which at a rate of 6% is better than anything available on the open market. But given that you are paying £240 a year and the maximum interest you’ll receive on the account is £96, it’s still not worth it.
So, while I will continue to pop into M&S when I need new socks or a decent ready meal, I won’t be opening an account there.