Do customers really get the headline rate on their current account?

Recent current account adverts boast sky high interest rates, but the Coventry urges people to check what they really get before deciding who to switch to.

Rachel Haworth, Head of Marketing at the Coventry says: “We have worked hard to develop a comprehensive range of straightforward and transparent current and savings accounts, the success of which is illustrated by our substantial 25% growth in deposits during 2007. We believe customers could be misled by some high headline rates on current accounts and we lay down the gauntlet and urge other organisations to show the rates typically earned by their customers on their “so called” high interest current accounts.

“Customers are carrying out a significant amount of account switching, only for the actual return on their entire balance to be considerably less than they were expecting. The actual rate earned can often average significantly less than 3%, far less than the headline rate being advertised.”

“For example, a customer switching to a top-rated account, and keeping a steady balance of £2,500 deposited throughout the year, will indeed earn a good rate of interest. However, this is not how many people operate current accounts. Customers who have their salaries paid into their current account will have a significant balance at the start of the month (even more so in the case of joint accounts) and therefore find a sizeable proportion of their money earning almost no interest at all.

“This is made worse if the headline rate encourages them to leave any amount of savings in the account and if the rate decreases substantially after the first year.”