- Average credit rates on current accounts rates rise 0.42% despite 1% Bank of England increases
Average credit interest rates on current accounts have risen by just half the level of Bank of England interest rate rises in the past 10 months, new research* from MoneyExpert.com shows.
Current account customers in the black now earn an average 1.97 per cent compared with 1.55 per cent in October 2006, the independent financial comparison website’s research shows. While credit rates have risen 0.42 per cent the Bank of England has pushed through FOUR interest rate rises taking the base rate from 4.75 per cent to 5.75 per cent with the threat another one to come by the end of the year.
Major banks are currently under pressure over unauthorised overdraft charges with the Office of Fair Trading taking a test case to the High Court which could trigger massive compensation payments for customers.
However MoneyExpert.com is urging customers to think carefully about their current account – and switch if they are unhappy. Its research shows around half of current accounts pay customers less than one per cent if they are in credit on their account.
Sean Gardner, Chief Executive of MoneyExpert.com, said: "Current accounts are the major personal finance issue in the UK at the moment with unhappy customers angry about charges and a court case involving the OFT.
"Loyal customers though aren’t doing all that well either – rates for those who are in credit have risen by just half the level of increases in the Bank of England rate.
"There are plenty of really good current accounts out there paying as much as 6.5 per cent interest to customers who are in the black.
"Of course there is more to a current account than the interest rate paid. But if you’re usually in credit and don’t need an overdraft you really should consider switching to a better account."
MoneyExpert.com’s switching index shows more than 3.6 million people have moved current account provider in the past year – around 300,000 a month.
The Banking Code states that current account providers have to provide details of standing orders and direct debits within three working days of a request from a new bank. The new bank has to provide details of the new account within 10 working days after approving an application. Five years ago the process could take as long as 12 weeks, MoneyExpert.com says.
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* MoneyExpert.com analysis on October 9th 2006 and August 9th 2007