Halifax ups the stakes in the battle for current accounts

Andrew Hagger, Head of News and Press at moneyfacts.co.uk, looks at the incentives being offered to customers to switch current accounts.

“The fight to win a bigger share of the current account market has intensified in 2007 with institutions trying different methods to attract more customers to whom they can then cross-sell other personal finance products.

“Barclays kicked off the year by offering a 12.5% regular savings ‘carrot’ to anyone switching their current account and salary/pension (min £1,000) to them by 28 February. Whilst 12.5% is certainly not to be sneezed at, consumers need to realise that this is only a 12-month deal, and when it comes to an end, they will be left with an uncompetitive current account and will need to go through the rigmarole of switching banks again in search of the next short term deal.

“Abbey has hit back with an increased credit interest rate of 6.3% on its current account for anyone that switches to Abbey from 1 February. Again this deal only lasts for 12 months and the 6.3% only applies to the first £1,000.

“If you’re looking for a longer-term home for your current account and are the sort of customer that always remains in credit, then the new deal from Halifax with their High Interest Current Account is definitely worth a look. Not only will you receive 6% on the first £2,500 on any credit balance, there is an added incentive of £100 for anyone taking up this offer.

“If you keep more than £2,500 in your current account rather than putting some of it aside in a savings account, then the ‘First’ current account from Coventry BS may be right for you. Coventry have just upped its interest rate to 5.70% from 1st Feb, but unlike Abbey, Halifax and Alliance & Leicester, there is no upper limit on which credit interest will be paid.

“Current account customers have always been highly sought after by banks and building societies, but the battle seems to be intensifying and there are now some really tempting deals out there for those who may be fed up with their existing provider, due to poor service or poor rates, or in some cases, both!”