Time to switch current accounts?

Loyalty, it would seem, buys a bit fat zero where banks and current accounts are concerned. Yet apathy combined with an incorrectly-perceived high hassle factor prevents most people from switching current accounts.

Moveable feast

With the Office of Fair Trading continuing its investigations into the unfairness of many bank charges, loyalty will become an 'overdrawn commodity' as our venerable financial institutions look for other ways to recoup their potential lost millions. First Direct for example, recently announced it intends to charge a monthly fee for a simple, unpackaged current account from this month. Unless you deposit or maintain a balance of at least £1,500 in your First Direct account, you will be charged £10 per month. It is estimated that upwards of 200,000 customers could be penalised in this way.

Banks mean business

The current account market is fiercely competitive. The big four banks Barclays, HSBC, Lloyds TSB and NatWest have found from experience that once captured, usually as students, customers tend to stay for the duration. However profitability comes well before loyalty in the banking world. A personal example; after 40 years with the same high street bank NatWest, and the last 21 years with the same branch, I recently exceed my authorised overdraft limit for the first time by £200 because of a delayed deposit of funds by three days. With breath-taking alacrity a cheque is 'referred to drawer' and I am billed £38.50 for NatWest's time and trouble. Of course, the bounced cheque has to be a credit card repayment to a rival financial institution, so I'm penalised a further £12.50 and forced to double up my payment, with credit facilities cancelled until I make good.

With regulatory pressure likely to restrict the gushing well of overdraft charges it's estimated that we pay some £4 million to banks every year in such penalties, the obvious move is for banks to charge for the privilege of having a current account, even if you keep it in credit. After all, this is what they do in the USA and France, for example. Could switching one's account from bank to bank become a national obsession, one to rival the never-ending quest for the perfect credit card deal? Unlikely, but there's no doubt that many people could benefit.