Internet only current account customers urged to get the best deal

On average, internet only current accounts pay 2.27% per annum less than the most competitive current account deals on the high street, according to uSwitch.com.

Internet only current account rates have decreased from an average of 3.28% to 3.04% per annum in the last two years.

Nick White, Director of Financial Services at price comparison and switching website uSwitch.com says: “first direct is the first current account provider to implement a monthly fee for people that do not comply with their new terms and conditions introduced this month. This will be regarded by many as a pre-emptive move to the OFT’s impending current account investigation. In fact, not only does this account pose the threat of a monthly fee for some customers, it also offers an in-credit interest rate of just 1.98% per annum which has not increased at all in the last two years.

“A recent investigation from uSwitch.com has shown that across the board, the average in-credit rate offered by internet only current account providers is just 3.04% per annum. This has actually dropped by 0.24% in the past two years from 3.28% per annum. This is quite a contrast to the most competitive current account deals available on the high street where rates have increased from 2.50% per annum to 5.31% per annum over the same period.

“With the popularity of the internet continuing to grow, more consumers are servicing their current accounts online with almost half (48%) of internet users now doing so. However, it seems that people banking with online-only operations are actually getting a worse deal as far as in-credit interest rates are concerned with the added loss of branch access.

“The only internet only bank to have raised interest on their current account in the past two years is Intelligent Finance, which currently offers a rate of 3.00% per annum. In direct contrast to these figures, when you look at the rates of interest on certain high street banks, you find a very different picture. The rate on the Abbey Current Account has gone up from 2.5% per annum to a whopping 6% per annum over the last two years alone, and rates of 5-6% annum can be found on accounts with HSBC, Coventry BS and the Halifax which makes the offerings from the internet banks look pretty miserly.”