uSwitch.com: Abbey's market-leading 8% current account

Following the launch of Abbey’s market-leading 8% AER current account, Mike Naylor, Personal Finance Expert at independent online price comparison and switching service uSwitch.com, warns consumers not to be lured in by limited offers: “This is another headline-grabbing current account rate that puts the big banks to shame as they continue to offer average in-credit rates of just 0.87% AER. Customers switching to this account could get around £40 interest in just one year which is eight times the £4.35 earned with the Big Four. This is a good offer but we can’t overlook the fact that this account is clearly designed to attract new business and yet again existing customers have been neglected.

“The main drawback to this account is the fact it’s a one year offer. The interest earned in the first year is high, but this would drop considerably when the account defaults to an in-credit rate of just 2.5% AER in month 13. During the second year consumers will earn just £12.50 which is a drop of 5.5% AER, leaving them £27.50 lighter in the pocket.

“Customers that fail to switch away at the end of the one year introductory offer will end up out of pocket. As an alternative, the Halifax High Interest Current Account, an ongoing offer for both new and existing customers, gives consumers £92.55 interest over three years which is 42% higher to Abbey’s £65.00. In fact, if you take into account Halifax’s £100 incentive to switch, this increases to a total of £192.55 over three years which equates to £64 per year.

“Overall, we shouldn’t lose sight of the fact that Abbey is investing a large amount of money to give current account customers a good return on their money. Any incentives that banks can offer to fuel the current account switching market is good news for the industry as this is still an area of complete inertia. Switching current accounts is a quick and easy process and banks such as Abbey will provide a dedicated member of staff to manage the whole process for every customer.”