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Concern over new current accounts
By Louise Greenwood
Your Money Reporter
Halifax is one of a number of banks to offer cash rewards on some accounts
Consumer groups say they are concerned about the fees and charges attached to a new breed of current account.
Some of these deals use cash bonuses to entice customers, but overdraft charges can be as high as £5 a day.
One group says banks are planning to end free banking if they lose their landmark legal battle over charges with the Office of Fair Trading (OFT).
But the British Bankers Association said the accounts were simply the product of a competitive marketplace.
Cash bonus
Earlier this month, Halifax Bank of Scotland launched its Reward Current Account, which offers a monthly cash bonus of £5 for every £1,000 paid in.
Go overdrawn, however, even with a prior agreement, and it will cost the customer £1 a day, rising to £5 for an unauthorised overdraft.
A similar current account from the Alliance and Leicester is offering new customers a £100 cash bonus just for signing up.
Again, the unauthorised overdraft costs £5 daily.
Also becoming more common are so-called "packaged deals".
Two have been launched by the Abbey, offering discounts and free insurance in return for a flat fee of £15 a month.
'No coincidence'
Phil Jones, head of money research at consumer group Which?, said a new trend was developing while the OFT inquiry into the legality of bank charges rumbled on.
"It seems a bit of a coincidence that while this court case is going on... the banks are introducing a whole range of accounts with different charging structures."
John McFall says banks cannot get away with hidden charges
But the British Bankers Association (BBA) dismissed this claim as nonsense, saying accounts like these aimed to attract customers in a competitive marketplace.
Brian Capon, assistant director of the BBA, said cash bonuses were simply part of a bank's attempts to gain an advantage.
"With the interest rates we've got at the moment, which are quite flat, the banks are looking to get that competitive edge... so really it's to have that little bit of something [extra], that unique selling point."
'Debacle'
But some MPs say it is a worrying development on the part of the banks and are urging them to spell out the true cost of these deals when selling them.
"If there is the slightest doubt on transparency, then they are laying themselves open to charges that these costs are hidden," said John McFall, chair of the Commons treasury select committee.
"The lesson for the banks, after the debacle of recent years, is that they cannot get away with hidden charges... so let them be transparent, let them be open and honest with consumers about what they are letting themselves into."
By Louise Greenwood
Your Money Reporter
Halifax is one of a number of banks to offer cash rewards on some accountsConsumer groups say they are concerned about the fees and charges attached to a new breed of current account.
Some of these deals use cash bonuses to entice customers, but overdraft charges can be as high as £5 a day.
One group says banks are planning to end free banking if they lose their landmark legal battle over charges with the Office of Fair Trading (OFT).
But the British Bankers Association said the accounts were simply the product of a competitive marketplace.
Cash bonus
Earlier this month, Halifax Bank of Scotland launched its Reward Current Account, which offers a monthly cash bonus of £5 for every £1,000 paid in.
Go overdrawn, however, even with a prior agreement, and it will cost the customer £1 a day, rising to £5 for an unauthorised overdraft.
A similar current account from the Alliance and Leicester is offering new customers a £100 cash bonus just for signing up.
Again, the unauthorised overdraft costs £5 daily.
Also becoming more common are so-called "packaged deals".
Two have been launched by the Abbey, offering discounts and free insurance in return for a flat fee of £15 a month.
'No coincidence'
Phil Jones, head of money research at consumer group Which?, said a new trend was developing while the OFT inquiry into the legality of bank charges rumbled on.
"It seems a bit of a coincidence that while this court case is going on... the banks are introducing a whole range of accounts with different charging structures."
John McFall says banks cannot get away with hidden chargesBut the British Bankers Association (BBA) dismissed this claim as nonsense, saying accounts like these aimed to attract customers in a competitive marketplace.
Brian Capon, assistant director of the BBA, said cash bonuses were simply part of a bank's attempts to gain an advantage.
"With the interest rates we've got at the moment, which are quite flat, the banks are looking to get that competitive edge... so really it's to have that little bit of something [extra], that unique selling point."
'Debacle'
But some MPs say it is a worrying development on the part of the banks and are urging them to spell out the true cost of these deals when selling them.
"If there is the slightest doubt on transparency, then they are laying themselves open to charges that these costs are hidden," said John McFall, chair of the Commons treasury select committee.
"The lesson for the banks, after the debacle of recent years, is that they cannot get away with hidden charges... so let them be transparent, let them be open and honest with consumers about what they are letting themselves into."
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