Following a speech last week by the future banking regulator, Andrew Bailey, there has been speculation about the possible end of free-in-credit current accounts.
Most people have got used to not having to pay for their current account, unless they go overdrawn. The UK is unique in Europe in enjoying free banking so its demise would cause quite a stir.
One of the features of the current account market is that customers tend to be very loyal. Only about 4% to 8% of customers switch their current account each year, depending upon which estimate you read.
But are they paying for such loyalty? It is quite possible that by changing their current accounts, they could get a better deal elsewhere.
It is also likely that switching would increase dramatically if free-in-credit current accounts disappeared because the imposition of monthly charges would undoubtedly spur many to look for possible alternatives.
In essence, there are four types of current account available.
Basic bank accounts
These do not offer overdrafts. If they have a debit card it tends to have limited facilities.
They can be opened without undergoing any credit check and are offered by the providers as part of the government's strategy for financial inclusion because they enable those who cannot get a full service current account to access banking facilities.
They do not incur a monthly fee. There are 20 basic bank accounts available.
Free-in-credit current accounts
These are full-service bank accounts that are free to use for those that remain in credit. There are 55 free-in-credit current accounts available.
Student current accounts
These are broadly similar to free-in-credit current accounts but tend to offer interest free overdrafts and other goodies to attract students who, the providers hope, will remain long-term customers.
There are 28 student current accounts available.
Packaged current accounts
These are full service current accounts that charge a monthly fee which typically range from about £8 up to £25, although some premier accounts charge as much as £40.
In exchange for the charge, a variety of incentives such as travel insurance, mobile phone insurance and motor breakdown assistance policies are provided.
There are 65 packaged current accounts available.
There are also a number of current accounts denominated in foreign currencies which can be useful for those who have foreign income and expenditure.
ProvidersCurrent accounts tend to be dominated by the banks but there are five building societies that offer current accounts.
There are also a number of foreign banks that offer them such as ICICI, Punjab National Bank and the State Bank of India. Tesco has signalled its intention to launch a current account in the not-too-distant future.
When looking for a new current account, there are a few key points to consider.
“Start Quote
End QuoteA current account does not have to be for life and there are significant safeguards being put in place to make switching a relatively seamless process”
Firstly it depends upon how the account will be used, because the best account will vary from person to person.
Those who never use an overdraft should opt for an account that pays interest on credit balances. Some 63% of current accounts no longer pay interest.
Examples include Halifax's Reward Current Account, which pays £5 (net of basic rate tax) every month that at least £1,000 is paid in. Santander's 123 Current Account charges £2 a month but pays interest of 1% on balances over £1,000, 2% on the entire balance if the balance is over £2,000, or 3% on the entire balance if it is over £3,000 up to a maximum balance of £20,000. It also pays cash back on council tax, utility and communications bills.
Somebody more likely to go overdrawn should concentrate on the overdraft costs. There are a myriad of different overdraft tariffs in the market and this complexity makes overdraft comparisons very difficult.
The size and frequency of overdraft usage and the number and size of transactions can all affect the overall cost. It is also worth noting that the availability of overdrafts is subject to the credit status of the applicant.
Some current accounts offer an ongoing interest-free overdraft. The highest interest free overdraft from a free-in-credit current account is £500 from Citibank's Plus Current Account but customers must pay at least £1,800 into the account every month otherwise there is an £8 monthly fee. By paying less than £1,250, the interest free overdraft is removed.
It is worth noting that interest-free overdrafts are generally more prevalent among packaged current accounts.
Online bankingCustomers should also consider whether they want branch access or would accept doing all their banking online. They should check that the account permits them to operate it as they wish.
Some accounts insist on paying in a minimum monthly amount every month - typically £500, £750, £1,000 or £1,500. This is to ensure it is used as a primary current account.
Failing to pay in the required monthly amount with one of these accounts would probably lead to a benefit or incentive being reduced or removed, or a financial penalty being levied.
Anyone contemplating a packaged current account should make sure they want and need the various incentives and, if so, that they are suitable for their circumstances and represent value for the monthly fee being charged.
Some providers restrict certain other products to their current account customers. Anyone wanting an HSBC credit card or unsecured loan can only get it if they have an HSBC current account. NatWest and RBS have a similar restriction.
Some providers offer special mortgage deals to their current account customers, but do bear in mind that just because a mortgage is a "special" deal, it does not necessarily mean that it cannot be beaten elsewhere.
Enhanced savings, unsecured loan and credit card deals are similarly in evidence.
There is no doubt that providers want you as a current account customer, provided of course that you use it as your main current account.
They regard it as the key way to build a relationship with the customer and it enables them to target customers with other products that are appropriate for their circumstances.
Many providers want to become a one-stop shop for all their customers' financial needs, and the current account is the preferred avenue by which to deepen such relationships.
A current account does not have to be for life and there are significant safeguards being put in place to make switching a relatively seamless process. It is worth taking the time to see if you can get a better deal and it might save you a lot of money.
The opinions expressed are those of the author and are not held by the BBC unless specifically stated. The material is for general information only and does not constitute investment, tax, legal or other form of advice. You should not rely on this information to make (or refrain from making) any decisions. Links to external sites are for information only and do not constitute endorsement. Always obtain independent professional advice for your own particular situation.
MP backs bid to draw in shoppers - wirralnews.co.uk
BIRKENHEAD MP Frank Field has added his voice to a campaign launched by the Grange and Pyramids shopping centres aimed at promoting the town.
Derek Millar, commercial director at the shopping centres, said We Love Birkenhead would bring retailers and residents together to spread the message that Birkenhead was "a fantastic place to live, work and shop".
The campaign will draw on support from celebrities, sports stars and business leaders with a link to Birkenhead as well as community stalwarts.
Like many town centres Birkenhead has suffered during the recession, with the demise of major chains like Woolworths and Peacocks and other big names like Currys and Topshop closing their stores to concentrate on branches in out of town retail parks – but Mr Millar said the future was "looking very bright".
The shopping centres recently had a change of ownership and are now being managed by LaSalle Investment Management.
Mr Millar said: "With so much doom and gloom in the news these days, we wanted to find a way of celebrating the many positive things about the town and community, which is a home and workplace to so many people.
"The new company is very committed to looking at a long term and solid strategy for the future of the shopping centres.
“Our campaign is all about celebrating the many virtues of the town and underlining how important the shopping centres are to the community they serve, not only as a place to buy the things you need but also as a social hub and major employer.
“It is an exciting time to be part of the team here and the future is looking very bright indeed.”
Mr Millar said Birkenhead's new Asda store had been a "positive development" and there was more to come.
He said: "In the last week, Next has opened its new, extended children's wear section, which has created three new jobs and gained the store an extra 2,000 square foot of trading space. It has also signed a ten-year lease underlining its commitment to the centre for the next decade.
"Poundland has opened a new store in the former Peacocks unit which is creating 19 new jobs for the town.
"We are also very close to signing up a new retailer for the former TJ Hughes store and terms have been agreed with two retailers for the former Currys unit.
"The new Asda store has, in many ways, been a positive development for the centres because it has brought new customers into the town which we have benefited from. The key aim for us is to make sure we continue to encourage those customers to the Grange and Pyramids and we will achieve this by continuing to offer a good mix of retailers and services which make us different to other shopping centres."
Mr Field said: "My affection for Birkenhead, since I came here more than 30 years ago, has always been the same. I have always had this sense that it is a place where people feel a very strong sense of identity.
"The people here are very proud of their town and while they like Liverpool, they love Birkenhead and that message has always been very loud and clear.
“I can’t tell you how pleased I am to hear there has been a change of ownership for the shopping centres and to hear about their commitment to a duty of care in the long term."
Mr Millar added: "The long term plan and focus is to continue to build on the great range of shops, both individual and well-known high street names, which we have at the centres, coupled with a terrific range of eateries.
"This varied mix of retailers and restaurants is what keeps our loyal customers coming back and we are working very hard to continue bringing in new businesses for our shoppers to choose from."
Shopping around too tiring? Use smartphone - Yahoo Finance
Melanie Sheridan doesn't do much shopping these days without her smartphone. As a work-at-home mother and the creator of the blog "Mel, A Dramatic Mommy," Sheridan says she relies heavily on her phone to organize her household shopping and keep a close eye on her spending.
"I've been on a serious mission to slash our grocery budget," says Sheridan, who lives with her husband and son in San Diego. "Now that I've got an iPhone, I told my husband it will start paying for itself in terms of savings."
Tech-savvy, price-conscious consumers have hundreds of mobile phone applications to choose from. Sheridan says she's shaved about $50 off her family's monthly grocery bill by using a combination of five different smartphone shopping apps. Sometimes the savings come from something as simple as making a list and sticking to it. But she says the real household budget help comes from smartphone apps for comparing prices.
Apps take legwork out of comparing prices
Amazon Price Check is one of Sheridan's go-to apps for retail items because it allows her to see if better prices are available online while she's shopping in a store. She scans item barcodes with her phone's camera or types product names into the app's search bar to compare the store's prices to those offered by Amazon and its merchants.
ShopSavvy, Google Shopper and eBay's RedLaser are comparison-shopping apps that work in similar fashion but show prices charged for a particular item across the Internet and at other local stores.
If you're having trouble finding a store selling what you're looking for, apps such as Goodzer can help you source almost any consumer item, whether it's available at a chain store or local mom-and-pop shop.
The Consumer Reports Mobile Shopper allows you to instantly compare prices from both online merchants and local brick-and-mortar stores, plus it shows you the product reviews and insights the magazine is known for.
Shop around for a shopping app
The Consumer Reports app has an annual fee, $4.99 a year, while the others mentioned so far are all free. Often, you won't have to open your wallet for a great app that will save you money.
"When it comes to apps, the adage that you get what you pay for is really irrelevant as a litmus test for consumers to decide if they want to install an app," says Ryan Ruud, a digital media expert in Minneapolis who calls Target's free shopping app his "lifeline."
Ruud says plenty of great free smartphone shopping apps are available, often supported by advertising or provided by a particular store hoping you'll shop there. But understand that while a retailer's branded app may offer the latest deals and list-making features, it likely won't tell you if a competitor has a better price. So it's worth shopping around for the right app before you start doing the real shopping around.
To find a quality app, Ruud advises consumers to look at the reviews in an app store. If an app has several hundred reviews or more and the ratings are high, he says it's probably good. Likewise, regular updates for minor fixes are a good sign the app's maker offers ongoing support. If you pick the wrong app, you can always delete it and find another.
Shopping and talking?
Siri, Apple's voice-recognition tool, has been something of a sensation since it was introduced for iPhone last year. Now a number of popular shopping apps advertise the possibility of speaking to your smartphone instead of typing in a product or scanning a barcode to do a price check. Unfortunately, the more cutting-edge you are, the more bugs you're likely to encounter. Voice-controlled shopping apps -- available for both iPhone and Android platforms -- are still in their infancy, with kinks still to be worked out.
Craig Agranoff, a technology reporter and co-founder of Grip'd, a Boca Raton, Fla., company that develops iPhone and iPad apps, says he's not quite sure Siri is a useful mobile shopping tool just yet.
"Voice for product searching seems to be a bit far off for now since you're really hoping that the operating system recognizes what you said properly," says Agranoff. If the voice app doesn't understand you, you'll be back to manually entering product information or scanning the barcode.
But Agranoff points out that the speed of innovation in the mobile-app space is intense, so better voice recognition is coming.
Caution on privacy
While free apps can certainly help you simplify your shopping and save, they also raise some serious questions about consumer privacy, says Aaron Messing, a lawyer who specializes in information privacy issues at OlenderFeldman in Union, N.J.
"If you have a smartphone, it knows everything about you," he says. "Consumers should understand what types of data they will be sharing when they use a particular app."
Read the terms of service before installing any app. Messing says you also need to ask: Will this app have access to my location, pictures, contact book, and voice or text communications? If so, when will it collect that information, and how will the app use it?
Even people who are extremely cautious about their privacy may decide the benefits of smartphone shopping apps are worth giving up some personal information for, he says. All experts stress that whether a shopping app is free or costs you something, it will track your shopping habits because that's often how customized deals are targeted to specific consumers.
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