Five tricks to outsmart your bank
We reveal how keeping on your toes with your bank could help make the most of your money.
If you know what you’re doing, banks offer some fantastic benefits – from lengthy 0% interest credit card deals to hundreds of pounds in cashback for switching current accounts.
However, you’ll probably need to fulfill pretty strict terms and conditions in order to qualify for the most competitive deals.
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We reveal five ways to avoid common financial pitfalls and ensure you receive the best deals on your money.
1. Don’t pay for perks you don’t need
Packaged or fee-paying current accounts hit the headlines last week when the Financial Services Authority (FSA) announced plans to crack down on the manner in which these products are marketed.
If you take out one of these accounts, you’ll pay a monthly fee in exchange for a range of benefits such as travel insurance, breakdown cover or mobile phone insurance.
According to the FSA, one in five people pays for their current account. However, the regulator believes many of these customers are forking out for benefits they rarely use.
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If you’re considering a fee-paying account, check you would take advantage of the perks and scour the fine print for any exclusions.
2. Keep an eye on 0% end dates
If you’ve taken out a credit card with an interest-free introductory period, make a note of when the 0% rate expires. This way, you can either clear your debt in full before or if necessary, shift your balance elsewhere. Otherwise, you’ll start paying expensive interest and could work up a debt again.
With market-leading balance transfer deals offering interest-free deals up to 22 months, the end date could easily slip your mind if you’re not vigilant.
3. Close accounts you don’t use
If you’re looking for a new bank account, be aware that a number of the most competitive offerings require you to make a minimum deposit each month.
If you fail to do so, you may be charged a penalty fee. For instance, the First Direct 1st Account will pay an impressive £100 welcome bonus, but you must deposit at least £1,500 a month. If you miss this target, you’ll be charged £10 a month.
4. Beware of the ‘bonus’ trap
Some of the most competitive savings accounts come with bonus rates that expire after 12 months. After this bonus period has expired, the return will probably become far less competitive.
At present, Nationwide pays 3.12%, but includes a bonus of 1.58% that disappears after 12 months.
If you opt for this account, remember to make a note of when your ‘bonus’ period ends so you can move your money into a more competitive account.
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.
5. Speak up
As we said earlier, banks don’t set out to rip off their customers, but that doesn’t mean things can’t go wrong.
If you have a complaint, your first step is to get in touch with the customer services department.
However, if you’re unable to find a satisfactory resolution after eight weeks, you may be able to complain to the Financial Services Ombudsman (FSO).
If you’re not having much luck with customer services, the threat of involving the ombudsman could speed matters along. Although it is free for you to take a complaint, companies that receive more than three complaints a year pay £500 per case.
**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.**
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