Alliance & Leicester's new current account rate

Commenting on Alliance & Leicester's new current account rate of 8.5 per cent AER, Kevin Mountford, head of current accounts at moneysupermarket.com, said: "It is fair to say over the past few months the current account market has felt flat. This is likely due to both seasonality and the OFT court case hanging over the industry like a cloud.

"However, this month has seen some lively new product changes from the likes of HSBC with its Bank Account Plus, and first direct’s First Account. Yet, these pale in comparison to the latest news from Alliance & Leicester which will really set a cat amongst the pigeons.

"Alliance & Leicester has laid down a serious challenge to Abbey by increasing the in-credit rate on its free Premier Direct product. Its whopping two per cent rise from 6.5 to 8.5 per cent makes it a market leading offer. The deal also charges 0 per cent interest on overdrafts. To top it off, this is not restricted to ‘switchers’, making it arguably the best all-round current account product available.

"It's a shame consumers seem reluctant to change current accounts as most providers make the process as easy as possible. Alliance & Leicester has actually put dedicated 'switching' teams in place to give hands-on support."