A bank account with no charges. But there are catches
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Stop the presses! After yesterday’s story about banks using sneaky charges to get yet more money out of customers, today we hear about a current account that does not charge customers for unauthorised overdraft charges.
The Santander account has been unveiled days before a major court judgement about the issue.
Thus far it seems that only Santander’s mortgage customers will be able to sign up for the account, which will also not charge a levy on payments that bounce or withdrawals overseas.
The Spanish bank said it wanted to convert customers with their home loans into current account customers too.
Santander is one of the banks involved in the test case on bank charges.
A judgement tomorrow (Wednesday, 25 November) will give a final ruling on whether the Office of Fair Trading (OFT) has the power to decide if the unauthorised charges are fair or not.
Seven banks, including Abbey, and one building society want to overturn two previous rulings that would let the OFT investigate their overdraft fees. Nearly a million people have claimed for the return of their unauthorised overdraft charges, but their cases are on hold.
The Santander Zero Current Account is being offered to Abbey as well as Bradford and Bingley mortgage customers from 11 January next year. It will be offered to Alliance and Leicester mortgage customers in the late summer of 2010.
The group has a 13.5% share of the mortgage market, with two million mortgage customers. It currently has 400,000 mortgage customers who also have a current account.
According to the advance information from the bank, “Santander is uniquely placed amongst UK banks to change the way it does business, and our new approach is one based on simplicity: the more business you do with us, the more we will offer you in return”.
In response, the personal finance website moneysupermarket.com, said this could shake up the current account market, which has been “devoid of ideas” for some time.
The interest charged on authorised overdrafts will be the same as unauthorised overdrafts, at 12.9% and cash advance loans.
In October, RBS-NatWest – majority owned by the taxpayer – broke ranks with the rest of the industry by slashing its overdraft charges.
It would be very easy to be overly cynical about this move because of the emphasis on mortgage customers. However, when put together with the RBS-NatWest move it could also point to a new recognition by the banks that they can make more money by treating their customers well than they will by treating them like dirt. But I won’t get my hopes up just yet.
