Alliance & Leicester lays down the gauntlet

Alliance & Leicester has announced that it will increase the credit interest on its Premier Direct current account to 8.19%.

Samantha Owens Head of Personal Finance at Moneyfacts.co.uk, comments “Alliance & Leicester has really thrown down the challenge to the other banks and building societies. Not only does its Premier Direct current account pay a whopping 8.19% on the first £2.5K but it also offers 0% on authorised overdrafts for 12 months.

Beware of the catches

“This rate is only guaranteed for the first year but reverts to a very respectable 4.25%, which would still make it one of the highest payers.

“All the highest paying credit interest accounts will require some monthly funding. It is only worthwhile if you are going to have a balance in your current account.

“Consumers should be aware that the great rate from Alliance & Leicester is only on the first £2.5K. This system of limiting the highest rates is typical in the current account market. The only best buy account which doesn’t is Coventry BS on its First account.

“Another restriction on the Alliance & Leicester account is that internet banking is compulsory. But in today’s world this won’t put off too many people.

Switching has never been easier

“With all major banks and building societies offering switching services there has never been a better time to switch accounts.

“Previous bad press has seen the institutions stepping up their game and most now have dedicated teams that make switching accounts as smooth as possible.

“Some of the biggest banks get away with paying poor rates on their accounts because they assume customers can’t be bothered to switch. Making a small amount of effort today could help you earn more in the long run.”