press release

ABBEY’s highly tempting current account bait - a market-leading 8 per cent – comes with more strings than a full scale orchestra, warns personal finance data analyst Moneynet.co.uk.

The headline rate will ensure the account shoots to the top of the best buy tables, but Richard Brown, chief executive of Moneynet.co.uk is sceptical about the real benefits to current account switchers.

“As appealing as it is, the offering is only available to account holders who are willing to transfer their existing current accounts to Abbey. It’s a shame that existing customers lose out, as loyalty should be rewarded,” says Brown.

“Although the account carries a head annual 8 per cent, it is only paid on the first £2,500 in the account. Any balance over that amount will earn a measly 2.5 per cent, the standard in-credit interest rate.

“And the lower rate also kicks in after the offer period of 12 months is up, so be sure to either switch to another account after 12 months or don’t switch in the first place,” he adds.

People who are willing to bite the bullet and switch accounts will need to top up the account with at least £1,000 a month to qualify for the headline-grabbing rate – anything less will earn the standard interest rate of 2.5 per cent.

“Those willing to switch and top up the account with the required monthly amount should also consider taking the advantage of another top interest rate offer from Abbey,” he advises.

“The Super Monthly Saver guarantees a 10 per cent AER for 12 months on savings from £20 to £250 a month – and this offer is for newcomers and loyal customers alike,” says Brown.

But Brown warns that switchers who get tempted by the latest current account offer should stay in the black as an authorised overdraft for the account will cost them a hefty 16.9 per cent.

Even though Abbey offers a preferential overdraft rate of 10.9 per cent with the 8 per cent interest rate still applicable for a year – the catch is that the credit interest rate drops to a dire 0.1 per cent after that.

To have the best of both worlds, Moneynet.co.uk recommends an alternative to the Abbey account – Alliance & Leicester’s Premier Direct current account.

“Even though A&L doesn’t offer such a high rate as Abbey, its 6.5 per cent rate on any balance up to £2,500 is still very competitive– it is fixed until 31 July 2008 and all that is required is to pay in at least £500 a month,” says Brown.

To have the best of both worlds, Moneynet.co.uk recommends an alternative to the Abbey account – Alliance & Leicester’s Premier Direct current account.

“Even though A&L doesn’t offer such a high rate as Abbey, its 6.5 per cent rate on any balance up to £2,500 is still very competitive– it is fixed until 31 July 2008 and all that is required is to pay in at least £500 a month,” says Brown.

The A&L account offers a zero per cent overdraft rate for a year from the opening date which then becomes variable at 5.9 per cent thereafter.

“Alliance & Leicester can even make the switching process painless – you just fill out a form listing all your direct debits and they will do the hard work for you,” adds Brown.

* BBA/BSA data, April 2007