Thursday 28th August 2008
by Bob Bardsley
Know Your Money Editor
Many consumers may have got their heads around comparing different financial products before making a decision. But once you have selected the most profitable - or least pricey - of the options available to you, is it likely that you will benefit more from staying put, or from transferring to a different provider? And what is the advice given to consumers who have never switched their current account, credit card, savings or insurance?
The prevalence of price comparison sites suggests that consumers are becoming increasingly savvy about their savings and investments - but it's worth noting that the supermarkets now even list their food prices online, showing that a greater breadth of products are being compared. Britons thinking about switching one or more of their financial products to a new provider could find it easier than ever to discover whether there is a more competitive deal out there. Here are some of the issues relating to different products at present.
Current Accounts
Perhaps the most significant financial product an individual is likely to arrange, your current account is typically the destination for your pay packet and, unless you transfer money out to a savings or investment vehicle, the place where your money spends its time waiting to be needed. But Alliance & Leicester reveals that 58 per cent of Britons have never switched their current account. Those who choose to do so are being encouraged by the financial services provider to opt for its Premier Current Account, with a bonus of £100 on offer to new customers who open their account online. Getting a friend who is already a customer to refer you could prove even more lucrative, with £25 paid to both the referrer and the new accountholder once everything is successfully up and running.
Lloyds TSB, meanwhile, is focusing on interest rates in its attempts to gain market share. The bank is offering 0.1 per cent AER on its Vantage account on balances of up to £1,000. Above that and up to £3,000, the rate leaps to two per cent, increasing further to three per cent once the balance surpasses £3,000. The top tier, however, is five per cent interest paid on between £5,000 and £7,000 - a figure which might seem more associated with an instant access savings account than a current account.
Credit Cards
With the new academic year almost upon us, many credit card promotions are currently centred on students. Halifax is aiming to tempt new customers with a paint splatter design, text alerts when payments are due and an updated web page showing the latest special offers available to its student users. Young people with a penchant for banking online might also welcome the option of managing their accounts via the internet at any time of day, as well as the promise of fraud protection when making purchases over the web.
Perhaps one of the most familiar credit card providers, Barclaycard has also announced the details of its offering for this year, including the publication of an online guide for its student users on how to borrow responsibly. Discounts from the lender include money off at Domino's Pizza and ticketmaster, the provider of tickets for gigs and events. Barclaycard's managing director of UK cards Amer Sajed points out that, far from being a negative thing, credit cards can help to establish a good credit rating when used sensibly.
Car Insurance
One of the areas in which consumers have long been aware of the advantages of shopping around is car insurance. With the internet, the days of telephoning every provider you can find might be over, but the potential to make substantial savings may not. Swift Cover suggests that younger drivers may be able to save up to £150 by taking cover from the most competitive provider. Those heading off to university might be particularly intrigued by the insurer's discovery that Endsleigh, which has on-campus branches at some universities in the UK, is not necessarily the cheapest. For a 21-year-old female employed as a hairdresser and driving a Volkswagen Polo, Swift Cover claims that its premium could be £113.46 cheaper than Endsleigh with the same excess.
Consumers who are not about to embark on their higher education might be more interested in Sainsbury's Bank's offer - which is only available to new customers, not to those renewing their cover. The financial services provider is offering 12 months for the price of ten on car insurance policies, with an additional ten per cent off if cover is arranged online. However, those hoping to benefit may have to act quickly, as the promotion expires on September 8th.
So what to do?
With the credit crunch one year old and still going strong, consumers might be looking to minimise their outgoings. Switching to more lucrative financial products could be a simple way of doing so without any major lifestyle changes. As always, the best buy tables are available to help identify the market-leading products when consumers decide they are in the mood to make a switch.
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