Santander to launch two new current accounts
The Preferred Current Account will pay 5 per cent in-credit interest rate on balances up to £2,500, plus a free arranged overdraft for 12 months when customers switch their main account to Santander. This account comes with preferential overdraft charges and will be available to customers who pay in at least £1,000 a month.
The Everyday Current Account is a simple, straightforward account which will be available to all customers. There is no minimum monthly credit requirement and customers will able to use the account in branch, online and by phone.
Nici Audhlam-Gardiner, Santander's Director of Banking, said: "The launch of these two new accounts marks a pivotal moment in Santander's ongoing aim to provide easy to understand current accounts for a wide range of people and to simplify overdraft charging.
"The Preferred Current Account is designed to appeal to customers by giving them the best of both worlds; a very competitive in-credit interest rate, plus a free arranged overdraft for 12 months if they switch their main bank account to us. It offers Santander's new, improved daily fees overdraft structure, as announced in January. The Everyday Current Account also has a transparent overdraft charging structure, and provides choice for customers who don't want to make a minimum monthly credit to their account.
"We will continue to offer our flagship Zero current account for customers who have a mortgage, savings or investment with Santander. This account is fee-free and also offers an in-credit interest rate of 5 per cent on balances up to £2,500.
"This choice of three accounts will allow us to reward customer loyalty through the depth of the banking relationship they hold with us."
As a result of these changes, Santander's existing Preferred In-Credit Rate Account and Preferred Overdraft Rate Account will be removed from sale at midnight on 27 February 2011.
Best buy
Michelle Slade from Moneyfacts added: "More than half the accounts on the market pay no credit interest at all and most of those that do pay just 0.10 per cent. The new Preferred Current Account stands head and shoulder above the rest paying 5 per cent AER, more than three times that of its nearest rival. Customers who switch to this account and who need to dip into their overdraft will also benefit from no interest charges for the first 12 months, making this an all round competitive account.
"Many of the main current accounts on the market require customers to regularly fund the account with around £1,000 a month, but for some customers this isn't possible. The Everyday Current Account would suit the needs of these customers as it provides full banking facilities, without the need for regular funding."
The new accounts in detail
1. Preferred Current Account
5 per cent in-credit interest on balances up to £2,500 for new openings and for customers who switch to this account using Santander's switching service and pay in at least £1,000 per month
After 12 months, in-credit interest of 1 per cent on balances up to £2,500, paid to all customers
Fee-free arranged overdraft for 12 months for customers who switch to this account using Santander's switching service (depending on circumstances). After 12 months, daily fees of 50p (capped at 10 days per month) will apply to arranged overdrafts
All unarranged overdrafts charged at £5 per day (capped at 10 days per month), with paid items charged at £5 and unpaid items charged at £10
An ‘under-funding' fee of £2 per month will be charged on this account if the minimum £1,000 monthly credit is not met
Existing customers with a Santander or former Alliance & Leicester current account can open a Preferred Current Account.
2. Everyday Current Account
No minimum monthly credit required (therefore no under-funding fee applies)
Fee-free overdraft for four months for customers who switch to this account using Santander's switching service
Existing customers with a Santander or former Alliance & Leicester current account can open an Everyday Current Account.
Zero current account
The Zero account is unique in the market with no overdraft fees, a competitive 12.9 per cent debit interest on overdrafts and no fees from Santander when you use cash machine or your debit card anywhere in the world. It is available to anyone who holds an eligible Santander mortgage, investment product or £10,000 savings with Santander.
New overdraft structure
The launch of the new current accounts follows the introduction of Santander's revised ‘three tier' overdraft charging structure, announced in January 2011.