Bank of Scotland Vantage - purpose of account?

Kernel_Sanders

where_are_we wrote: »

there is no profit in it for them if I use it as a savings accout !

Of course there is profit for them! Do you think they lend money to business at 3%?

System

Contrary to what you think, I'd be very surprised if the account isn't a loss leader.

Kernel_Sanders wrote: »

Of course there is profit for them! Do you think they lend money to business at 3%?

Kernel_Sanders

Heng_Leng wrote: »

Contrary to what you think, I'd be very surprised if the account isn't a loss leader.

OK, well, that's not an uncommon assumption on this board.
So, let's examine a typical holding where someone has 3 x BoS Vantage accounts, each with £5000 in, but all DDs, SOs and income are processed in one account. Now compare it with somebody else holding £15,000 in a Santander 123 a/c, also doing all their banking there and (typically) having their £5 fee offset by that amount in cashback. The two banks have similar costs for each scenario, and the customer has the same rewards but nobody seems to cite the Santander 123 a/c as a loss-leader!
Santander are paying 3%APR on the many billions of pounds in these accounts that exceed a reasonable current account balance. Do you think they do this out of generosity?

YorkshireBoy

Kernel_Sanders wrote: »

but nobody seems to cite Santander as a loss-maker!

Lots of people on here, myself included, have said exactly that. It's a big loss-maker in my opinion, and always has been as a standalone product. Reason being Santander could borrow money far cheaper than 3% (at any point in time over the last 3-4 years of running the account).

Do you think they do this out of generosity?

No. It's a gamble. They're speculating to accumulate, ie hoping customers take mortgages, loans, insurance products, etc, etc.

And they've realised they're losing too much money now (or rather they're not making money on the back of the account), hence the fee increase to £5...which will persuade many customers to leave. However, the people who are bleeding them (myself and others who are using them because we have already filled all the 5%, 4%, and 3% 'clean' accounts) will still continue to lose them money...just not as much!