Barclays to make banking simpler and clearer

Barclays is responding to customer feedback by overhauling its current account offering, replacing the unauthorised overdraft with a fundamentally new approach to overdrawn accounts, which significantly reduces the charges for customers who go beyond their agreed overdraft limit.

In addition, from 2 June 2008, Barclays is simplifying its range of new current accounts for personal customers, offering customers a choice of accounts which includes an interest-bearing current account and a new packaged account, whilst reaffirming its commitment to keep free in-credit banking as an option for customers.

New overdraft service

Personal Reserve is designed to act as a safety net for customers who exceed their agreed overdraft limit if they have one or go overdrawn if they don't. This gives customers the peace of mind that payments will be met, putting the customer in control of their finances.

The launch of ‘Personal Reserve' on August 18th will radically change Barclays approach to overdrafts and will differentiate the bank from the rest of the industry by replacing the unauthorised overdraft with a completely new structure. Personal Reserve significantly reduces charges and gives customers certainty about when their payments will be met and when they will be bounced.

For a single flat fee of £22 any customer who uses their Personal Reserve will have access to it for five working days. During this time a customer can use their Personal Reserve as many times as they wish and provided that they do not go beyond their Personal Reserve amount payments will be honoured.

Individual Personal Reserve amounts will be communicated to eligible customers between June and July. The average Personal Reserve amount will be £250. Customers will only pay for their Personal Reserve if they use it and all existing customers will be given an opportunity to opt out of having a Personal Reserve on their account if they do not want one.

There are no individual transaction fees, no arrangement fees and no interest will be charged on the amount used within Personal Reserve.

Payments which go beyond the Personal Reserve will be bounced, unless they fall into the category of a guaranteed transaction (e.g. a cheque payment guaranteed with a cheque card). With effect from August 18th customers will pay £8 per item for a returned or guaranteed transaction.

"We have listened to our customers and acted on this feedback by completely revamping our unauthorised overdraft service, replacing it with the new Personal Reserve. Our customers wanted a simple, clear way of managing payments when they go beyond agreed limits. The Personal Reserve gives certainty about when payments will be paid and when they won't, with just two simple, lower charges. Our new approach has been tested with consumers extensively over the last two years and we are confident that our products will promote account switching to Barclays," comments Mark Parsons, managing director of current accounts at Barclays.

Changes to current account range

Barclays is revamping its current account range on June 2, 2008 offering customers a choice of new accounts to fit their individual needs. Accounts range from free in-credit banking to fee-paying accounts with credit interest, interest free overdrafts and additional services. Existing customers will be able to switch into the new range if they wish.

"We are reaffirming our commitment to offering customers the choice of free in-credit banking if that is what they want. Increasingly we are finding that many customers are attracted by the extra benefits and services that are available on fee paying accounts. It is a matter of individual choice," adds Mark Parsons.

The new account range is:

Barclays Cash Card Account - no fee, money transmission account (direct debit and standing order), no overdraft facility.

Barclays Bank Account - no fee, money transmission account (direct debit and standing order), overdraft facility, Personal Reserve.

Current Account Plus - money transmission account with £3 monthly fee, 3% AER credit interest on all balances (no minimum monthly deposit), £300 interest free overdraft, Personal Reserve, plus additional services such as free extended warranty worth almost £100 in benefits (new account).

Additions Active - money transmission account with £14 monthly fee, 3% AER credit interest on all balances, £300 interest free overdraft, a preferential overdraft interest rate Personal Reserve, plus additional benefits worth over £680 such as world-wide family travel insurance and breakdown cover (new account).

Premier Life - same services as Additions Active plus a relationship team and other benefits worth over £1,000, £17.50/£25 monthly fee.

From July 1, 2008, as part of Barclays drive to simplify its current accounts, credit interest of 0.1 per cent on certain standard current accounts will no longer be paid. Research shows customers don't value it and it is worth on average two pence per week to the customer. Barclays authorised overdraft rate will increase from 15.6 per cent to 17.9 per cent from June 2, 2008, remaining one of the lowest agreed overdraft rates available from the six largest current account providers.

"The overall package of changes we are making for new and existing customers provides a simple, clear choice and improved value, marking a step change in current account banking in the UK," adds Mark Parsons.