Money News
| Rate (AER) | Minimum Balance | ||
|---|---|---|---|
| A & L | 8.50% | £1 |  |
| Barclays | 3.00% | £1 | |
| Barclays | 3.00% | £1 | |
| A & L | 1.00% | £1 | |
| Citibank | 0.10% | £1 | |
| * Based on £500 Credit and is a limited guide to the market | |||
Alliance & Leicester (A&L) is extending the 8.5% AER (8.19% gross) credit interest offer on both its Premier Direct and Premier 50 current accounts until 30 September 2008. The introductory interest rate offer is available on balances up to £2,500 fixed for one year. After one year, customers revert to the 'go to' rate of Bank of England Base Rate minus 1% (which currently equates 4.00% AER). The bank is also extending the 10% AER interest rate on its Premier 21 Current Account for 16 to 21 year olds.
Premier 50 is designed for customers aged 50 or over and offers worldwide travel insurance up to age 79 and exclusive health benefits, which include access to up to two private out-patient specialist consultations and up to £750 towards out-patient diagnostic testing per person per year, at a cost of £10 per month.
Research from Alliance & Leicester Current Accounts reveals almost 35 million Britons have made some form of financial cutback recently, and one third expect their disposable income to decrease over the coming six months.
A&L's decision to maintain its promotional offer goes against a recent industry trend. In May Halifax cut the rate on its Ultimate Reward Account and High Interest current account from 6.17% to 5.12%, paid on the first £2,500 balance; and from August 1, Nationwide FlexAccount holders who pay between £500 and £999 into their account per month will see their interest rates cut from 3.5% to 0.5%. Interest for those who pay in £1,000 to £1,499 will be cut from 3.5% to 2%, whilst those who pay in less than £500 will receive just 0.10%.
Emma Walkley, Current Account Manager at Alliance & Leicester comments, "By extending our market leading offer of 8.5% interest on both Premier Direct and Premier 50, we are offering 85 times more interest than the meagre 0.1% that many high street banks offer."
However, switching inertia still exists with, says A&L, almost one in ten people (7%) admitting they have had the same current account for more than 20 years. Over half (58%) of current account customers admit they have never switched current accounts.
Alliance & Leicester offers a 'Premier Switching Service' for customers switching accounts to one of the bank's Premier range of accounts. As well as taking the hassle out of transferring existing direct debits and standing orders from a customer's current bank, A&L will match the overdraft limit they had with their old bank.
15 July 2008 © Moneyextra.com
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