Alliance & Leicester extends best buy 8.5% current account credit interest rate

Great rates continue to put big-name banks in the shade

Alliance & Leicester is extending the 8.5% AER credit interest offer on both its Premier Direct and Premier 50 Current Accounts until 30th September 2008,1 it announces today. It is also extending the 10% AER interest rate on its Premier 21 Current Account for 16 to 21 year olds.

Research from Alliance & Leicester Current Accounts reveals almost 35 million Britons2 (73 per cent) have made some form of financial cutback recently, and one third (34 per cent) expect their disposable income to decrease over the coming six months. For the majority, 79 per cent, this is due to the rising cost of food, consumer goods, household bills and fuel prices.

With careful money management becoming increasingly important, a good credit interest rate and interest free overdraft combined can make a real difference in difficult economic times.

Emma Walkley, Current Account Manager at Alliance & Leicester said:
"While some providers 3, 4 have decided to cut the interest rate on their flagship current accounts, we are continuing to give unrivalled value by offering the best credit interest rate on the market. By extending our market leading offer of 8.5% interest on both Premier Direct and Premier 50, we are offering 85 times more interest than the meagre 0.1% that many high street banks offer."

Unfortunately, switching inertia still exists with almost one in ten people (7%) admitting they have had the same current account for more than 20 years. Even more worrying is that over half (58%) of current account customers admit they have never switched current accounts.5

Emma Walkley continues: "In the current economic climate, budgeting is at the forefront of people’s minds with our research showing that three quarters of the public have cut back on spending in recent weeks. Therefore it is even more important for people to be choosing a current account which will make their money work harder, and give them something back. There has never been a better time for people to update their finances and switch to the best current account deal on the market."

Alliance & Leicester offers the ‘Premier Switching Service’ for customers switching accounts to one of Alliance & Leicester’s Premier range of accounts – it takes the hassle out of transferring existing direct debits and standing orders from a customer’s current bank. If a customer uses the switching service, A&L is able to match the overdraft limit they had with their old bank.

Notes:

1. Alliance & Leicester’s 8.5% AER (8.19% gross) introductory interest rate is available on balances up to £2,500 fixed for 1 year. After 1 year, customers revert to the ‘go to’ rate of Bank of England Base Rate minus 1% (currently equates 4.00% AER).

2. According to the research 73% have made some sort of financial cutback recently. 73% of 47,788,000 GB adults = 34,885,240 adults. Opinium research carried out online between 2 – 6 May 2008 on behalf of Alliance & Leicester Current Accounts with a representative sample of 2,213 UK adults aged 18+ years old. www.opinium.co.uk

3. For example in May Halifax cut the rate on its Ultimate Reward Account and High Interest current account from 6.17% to 5.12%, paid on the first £2,500 balance.

4. From August 1, Nationwide FlexAccount holders who pay between £500 and £999 into their account per month will see their interest rates cut from 3.5% to 0.5%. Interest for those who pay in £1,000 to £1,499 will be cut from 3.5% to 2%, whilst those who pay in less than £500 will receive just 0.10%.

5. YouGov research carried out between 11 and 14 January 2008 on behalf of Alliance & Leicester Current Accounts with a representative sample of 1,925 GB adults aged 18+ years old.

Premier 50 is designed for customers aged 50 or over and offers worldwide travel insurance up to age 79 and exclusive health benefits, which include access to up to two private out-patient specialist consultations and up to £750 towards out-patient diagnostic testing per person per year, all for just £10 per month.

How the credit interest rates compare:

Bank / Building society Account name Credit interest AER Gross credit interest Gross interest on £2,500 over 12 months*
Alliance & Leicester Premier Direct 8.50% 8.19% £212.50
Barclays Bank Bank Account 0.10% 0.10% £2.50
NatWest Current Plus 0.10% 0.10% £2.50
RBS Interest Paying Current Account 0.10% 0.10% £2.50
HSBC Bank Account 0.10% 0.10% £2.50
Nationwide BS FlexAccount (paying in £500 – £999 per month)** 0.50% 0.50% £12..50
Halifax High Interest Current Account 5.12% 5.00% £128.00
Lloyds TSB Classic Plus 6.00% (until 13/7) 5.84% £150.00
Abbey Current Account (credit option) 8.00% 7.72% £200.00

* Indicative based on AER
** From 1 August 2008 – see note 4 above
Source of table contents: Company websites 7.07.08

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