What’s the deal?

Santander, the owner of Abbey, Alliance & Leicester and Bradford & Bingley, is enticing new customers with a £100 “golden hello” if they switch to certain bank accounts. The deal is being offered to new customers who switch their current account to Abbey’s Preferred Overdraft Rate account or Alliance & Leicester’s Premier Current Account. In addition, Abbey is increasing the interest rate it pays customers with balances of up to £2,500 to 0.5 per cent, from 0.1 per cent previously. A&L already pays 0.5 per cent interest. Both banks are offering a 12-month interest-
free overdraft. Abbey is offering to match new customers’ existing overdraft facility, up to a maximum of £5,000.

Is this any good?

Many banks have cut the interest rates for current account holders or increased overdraft rates in recent months so it is good to see Abbey doing the reverse.

Some banks are paying no interest on their current accounts so the £100 lump sum could help make up for the lack of monthly income.

Abbey’s overdraft account looks a good deal given that only a few other banks offer interest-free overdrafts other than on student accounts.

What’s the catch?

Customers who switch accounts will have to wait up to 11 weeks before they receive the £100. They also have to pay in a certain amount of money each month to qualify.

The minimum funding requirement on the Abbey account is £1,000 per month, while new customers of A&L’s premier account have to pay in at least £500 per month.

New customers also have to transfer direct debits and standing orders using the banks’ Account Transfer Service.

Existing customers who have current accounts with either Abbey or A&L or their subsidiaries or who have had any accounts in the past three months, will be excluded from the offer.

What’s the alternative?

First Direct, a division of HSBC, is also offering new customers £100 if they switch to its 1st Account, on condition that they pay in £1,500 a month. However, no interest is accrued on balances in credit.

HSBC will credit customers who open a standard or Plus account with £50 if they open it before October 4. HSBC’s standard account does not pay any interest on balances. The Plus account charges a monthly fee of £6.47, which doubles to £12.95 after three months. But the account does offer benefits including worldwide travel insurance, breakdown cover and access to a regular saver account that pays 8 per cent, according to Moneysupermarket.com, the price comparison site.

How do I find out more?

www.abbey.com

www.alliance-leicester.co.uk

www.firstdirect.com

www.hsbc.co.uk

www.moneysupermarket.com