Bank current accounts in the premier division

You're on well on your way to the top and naturally you want a bank account that says a little more about you than a common or garden one. Private banking with the likes of Coutts may be a bit out of your league at the moment but premier banking, the club class of current accounts, may be just right. You may have to pay a monthly fee but you do get someone to talk to, known in the banking industry as a relationship manager, and in most cases a spread of discounts and freebies.

The banks have suddenly noticed that the so-called mass affluent, that is those earning more than £50,000 a year, is growing at the rate of 1.5% a year. They currently represent 6% of the population, or 3.6 million. Furthermore, there's an even larger number, 7.5 million, who have more than £30,000 to invest.

Banking by invitation, not application

Lloyds TSB Scotland recently launched a new Private Client Banking service for those earning £50,000 plus in Scotland. Naturally you get your own private client banking relationship manager who can help you with products from all parts of Lloyds TSB Group including Lloyds TSB Private Banking and Scottish Widows.

The bank said that people earning more often have more complicated financial affairs yet have less time and want to be treated as an individual. However, you can't apply online for the service - you have to wait for a written invitation to join! Lloyds TSB is planning to open a new upmarket account for the rest of the UK soon. It has closed its existing premier account to new business and plans to re-open in a few months.

Abbey, too, has joined the club-class world of banking with its new Premium Banking Service. While as yet there are no new products, it is offering a dedicated telephone service for affluent customers from its Premium Banking operations in Glasgow and Belfast. The aim is to offer selected customers a financial review to make sure they are making the most of their money. In some cases the bank will offer advantages on its existing products for Premium clients. Almost 150 people are currently employed in Premium Banking and Abbey expects business to be brisk because it said staff numbers will double by the end of the year.

To take out a Barclays Premier bank account you need to earn more than £100,000 (or £60,000 if you are under 35) and £120,000 for couples or have £50,000 to invest. For £10 a month, you get a £1,000 free overdraft plus no arrangement fee on overdrafts up to £15,000, which have a typical rate of 12.5% EAR. You have your own banking manager for financial planning and telephone and online banking for everyday needs.

With HSBC's Premier Account you have to earn £75,000 before you are accepted. It costs £19.95 a month but if you earn the required amount and have a £100,000 mortgage with the bank, or have £50,000 invested, it's free. This is a packaged account that offers free comprehensive worldwide family travel insurance, commission free travel money, no fees for ATM use worldwide, discounts on hotels and preferential interest rates for savings, overdrafts, credit cards and mortgage. For example, you get an automatic overdraft facility of £5,000 and the first £500 is free after which the interest rate is typically 9.9% EAR. The typical rate on its Premier credit card for purchases only is 9.9% EAR.

The bank says that using all these benefits can add up to a saving of £2,200 a year. If travel is important to you, it could be the right product for you but you could be missing out on cheaper products elsewhere particularly in the mortgage department.

Accounts that pay you - how very interesting!

However, as competition has intensified between the high street banks, there are so many attractive deals around at the moment that you may feel that the fee for a club-class bank account would be put to better use earning interest. Abbey is currently paying 6% gross AER on its current account for 12 months if you pay in more than £1,000 a month. Halifax comes next paying 5.12% on balances up to £2,500 and you get 1% cashback on the first £10,000 spent on your debit card. Alliance & Leicester's Premier Direct pays 5% on balances up to £2,500 until end June 2007, plus you can get 10% interest on its Premier Regular Saver account for a year.

But if your bank balance is as healthy as your income and your have a surplus every month, you may find that a combined current account and mortgage will give you better value. The facility enables you to use balances in your current account and savings to offset interest against the mortgage. This tends to give more advantages to higher rate tax payers and is suitable for those who are certain to have savings they can leave untouched over the long-term.

05 July 2006 © Moneyextra.com

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