Are banks ripping us off?
With the Business Secretary’s claims that people in the UK are being ripped off by the country’s banks, we look at how you can avoid being taken in.
At a recent debate on banking reform, Vince Cable labelled banking a ‘flawed industry’ and said it has failed its customers.
He went on to say the industry operates a ‘rip-off culture’, which will only be eliminated if competition is increased to give smaller banks greater prominence.
Commenting on Mr Cable’s speech, Sarah Brooks, Director of Financial Services at Consumer Focus, said: ‘Nearly a third of people told us there was no point switching [their accounts to another bank] as all banks are the same - a sad indictment of our banking system.’
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Look into switching
The reality is, switching from one bank to another is not difficult and can be very financially rewarding.
Santander, for example, offers those who switch from another bank to its Preferred Current Accounts £100, just for signing up.
If you opt for one of these accounts you’ll also receive 5% AER on any money you put in, up to the value of £2,500.
Not only this, but you’ll receive an interest-free arranged overdraft for 12 months.
Another account you may want to consider is the Halifax Reward Current Account, which gives you £5 each month you deposit at least £1,000.
This means that, over the course of the year, you could potentially earn an extra £60.
However, no interest is paid on this account and you’ll be charged £1 a day if you use a planned overdraft of up to £2,500, £2 a day for larger overdrafts and a hefty £5 a day for unauthorised overdrafts.
There are certain terms and conditions surrounding switching to these, and most other, accounts, so make sure you read the fine print before making any final decisions.
Deciding where to go for your bank account, loan or savings account can be a tricky business, especially as there’s so much complicated jargon involved.
Transfer you debt
Your bank could also be ripping you off when it comes to the amount it is charging you in interest on your credit card debt.
Switching to another card with a long 0% balance transfer period could be the best option for you.
Barclaycard’s Platinum Credit Card boasts the longest-ever 0% balance transfer term of 24 months. This means you can switch your existing debt to the card and you’ll not have to pay any interest on it for two whole years.
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You will, however, have to pay a fee of 2.8% of the money you transfer over. So if you move £2,000 onto the card, you will have to pay a fee of £56.
With its Balance Transfer Credit Card, Halifax offers a 20-month interest-free period. The fee for this card is 3%, which means you’ll have to pay £60 to move £2,000 of debt over.
Again, make sure you fully understand the terms and conditions before signing anything.
Switching to the best deals on the market shows banks that you’re not prepared to be taken advantage of. If everyone were to do this, we could see some really big changes in the industry.
**This material is for information purposes only and should not be considered financial advice. We strongly encourage our readers not to rely solely on this content, but to seek independent advice when making financial decisions.**
