Alliance & Leicester: Abbey’s new 8% current account

Andy Bayes, Head of Current Accounts at Alliance & Leicester said: “It is great to see our competitors picking up the baton and joining us and challenging the Big Four by offering customers competitive rates of credit interest. We have led the way on this for years, consistently being recognised as the best current account provider in the market with our award winning Premier Direct account, and championing the benefits of switching. We are flattered that others are following our example.

“Whilst the Abbey account will offer new customers 8% AER, customers should look beyond the dazzling headline rate, and dig beneath the surface to check that all aspects of the account meet their needs including the interest rate after the promotional period, overdraft rates and minimum funding requirements.”

Alliance & Leicester highlights some areas for potential customers to consider:

Overdraft Rate

If a customer goes overdrawn Abbey’s overdraft rate is 16.9% - rising to 28.7% for unauthorised overdrafts.

With Alliance & Leicester’s Premier Direct account new customers benefit from a market leading introductory 0% overdraft for 12 months, longer than any other bank, followed by the lowest overdraft rate in the UK at only 5.9% APR for both authorised and unauthorised overdrafts.

Account Funding

To obtain the headline rate of 8% AER, new customers to Abbey must fund their account with a minimum of £1,000 each and every month.

With Alliance & Leicester’s award winning Premier Direct and Premier current accounts, the minimum funding requirement is just £500 per month - the lowest funding of any account paying credit interest over 0.10% AER.

In-credit Interest Rates

Abbey’s 8% AER credit interest rate reverts to just 2.5% or 0.1% after the first 12 months, depending which option the customer chooses.

With Alliance & Leicester’s Premier Direct customers receive 6.5%AER for the first 12 months, and Bank of England Base Rate minus 1% thereafter (currently 4.5% AER) - nearly double that of Abbey’s.

Andy Bayes continues: “Research shows that not everyone operates in credit these days as nearly three quarters (71%) of all current account customers have an overdraft facility, and a third (34%) make use of it every month - so a headline rate shouldn’t to be the only benefit.

“It is vital customers look at how they will realistically use their current account, and find one that offers them all round great value. By choosing Alliance & Leicester customers could be almost £300 better off over a four year period, than if they signed up to Abbey’s account.”

Andy Bayes added: “Current account customers looking for a better deal can switch to Alliance & Leicester and earn themselves hugely competitive rates of credit and debit interest with a proven market leader. In addition, anyone who comes to us via a friend will earn themselves and their friend £40 each, and we can take the hassle out of switching via our award winning switching service.”

Alliance & Leicester’s Premier Direct continues to be recognised as the UK’s best current account, and recently won Moneyfacts Award for Best Current Account credit and debit interest for the last few years. The account range offers the following:

Premier Direct: An award winning current account for people who are happy to bank online or by phone, offering a credit interest of 6.5% AER on balances up to £2,500 fixed until 31 July 2008, and the UK’s lowest overdraft rate of 5.9% EAR – after an initial 0% overdraft for the first 12 months.

Premier: Customers benefit from free European annual multi-trip travel insurance and attractive rates – 1.50% AER credit interest rate and a 7.9% EAR overdraft rate after an initial 0% overdraft for the first 12 months, together with a range of account servicing options: branch, online or telephone.