First Direct revamping current accounts

gt94sss2

First Direct is scrapping interest payments on current account balances from the beginning of November and replacing its two existing current accounts with a new account called 1st Account.

Instead First Direct will offer:

- A new no-strings instant access savings account, called Everyday e-Saver, paying 5.5% AER;

- Customers can set up an automatic monthly sweep to move money from their 1st Account to their Everyday e-Saver, to maximise the amount they earn from their savings;

- A new Regular Savings account paying 8.00% AER fixed for a year. Customers can save between £25 and £300 a month, which is £50 a month and £600 a year more than most other providers allow.

- The first £250 of overdraft will be interest-free;

- Free text message banking (which currently costs £30 a year) for all first direct customers. Customers will enjoy personal text alerts to warn them when they’re close to going overdrawn or over their overdraft limit. Free text alerts can also be set up for a host of other events – for example, when the balance reaches a certain amount.

first direct estimates that an average customer who does absolutely nothing will be better off by £1.20 a year, and the average customer who moves their savings from first direct’s existing instant access accounts to the new online Everyday e-Saver account will be better off by a further £34.80 a year.

Chris Pilling, first direct’s chief executive, explained: “A staggering 96 percent of our customers told us that credit interest wasn’t an important factor in choosing to bank with first direct. And almost 70 percent didn’t know the rate of interest on their current account. They were far more interested in our exceptional service, with real people at the end of the phone any time of day or night, 365 days a year. So we figured it made far more sense to use every single penny we currently pay in credit interest to give customers the chance to earn serious interest on higher interest savings accounts.

“We’re also addressing concerns about overdrafts. From November, every first direct customer will get an interest free overdraft up to £250. And we’re scrapping the £2.50 monthly fee for personal text message alerts, which means that no-one need slip into the red by accident thanks to our ‘red alert’ texts.”

More here

Regards
Sunil

eslick

There is already a thread on this but the original doesnt show all of the details. From November FD will no longer pay interest on current accounts they say "We believe current accounts are for spending and saving accounts are for saving" true but what about all of the funds that sit in my account waiting for bills to come out for which we receive very little interest at the moment. Strange that banks such as A&L are offering high interest rates on current accounts and FD are moving in the other direction. (I may be missing something but from what I can see this is what they are doing)

If I want to sweep money at the end of the month free I can do that myself on internet banking.

Good customer service is onething but a bank that takes all of your money and gives no interest even very small amounts is having a laugh. Time to jump ship before they come up with yet another excellent plan to help out the customer, charging for using accounts, no interest whats next not paying our Direct Debits every month so they can hold on to our cash a little longer




important changes to your current account

In recent months we’ve been asking our customers what it’s like to bank with first direct. Whilst we loved to hear about the good stuff we also learned one or two things that weren’t so good.
You told us that you'd prefer banking to be fairer and more transparent. You also told us that you want more choice and better value. You don't like offers that come with strings attached and you'd prefer a life without unpleasant surprises.
Here it is in black and white

Many of you told us that you’d prefer better savings products than a very ordinary rate of credit interest on your current account balance. We currently pay 0.1% AER (gross 0.1% p.a.) on Cheque Accounts and 2.00% AER (gross 1.98% p.a.) on Bank Accounts. From 1 November 2007 we will no longer be paying credit interest on current accounts. We believe current accounts are for spending and saving accounts are for saving – so we’re launching a package of new products and services which we believe offer you better value.
So it’s goodbye to as little as 0.1% AER, for your current account. And hello to:

• the 1st Account: (From 1 November your current account will automatically move over to the new 1st Account. Your account number will stay the same, you don't need to do anything)
• our Innovative Sweep Facility
• the new Regular Saver
• the Everyday e-Saver - absolutely no strings attached
• free Text Message Banking for all our customers
• £250 Interest Free Overdraft
• improved Internet Banking.

We will be sending you full details in the post. In the meantime everything you need to know can be found at www.firstdirect.com/1st
Thank you for banking with first direct.
Mark Mullen,
Head of Marketing

Gordon_the_Moron

If they only pay 0.1% as it is who gives a crap, the interest rate is so poor you don't want to be leaving money in there anyway if you can help it. If you really feel the need to use FD for their great customer service (I don't) keep about £100 in there for cash withdrawals and transfer money in from a savings account to maintain this as you need it and find a savings account that allows standing orders to pay in any direct debits a couple of days before they are due to go out so you minimise the amount you keep in the account.

0% or 0.1% its !!!!!!!! either way.

Da Moron

anandp

At the moment, its 0.1% on cheque accounts but most people will be on their normal current account, which pays 2% at the moment.

So it is quite a drop to the new 1st account which will pay a measley 0.1%.

I was willing to sacrific a few percent for better service, but now thats its going to 0.1%, I'm jumping ship!

Anand

p.s. anyone know what A&L's internet banking service is like?

stan5001

I joined when they had an old promotion, so they've been paying 3.5% on my account. This new thing is a great way to make money for them - it might be negligble if you use the overdraft for 2 weeks each month...

I changed to A & L in January, not impressed with the customer service - with FD, you got a human within 3 rings. With A&L they provide a retailers number on the card, but if you ring it they can't put you through, even if its an emergency.

I was going to go back to FD, but not so sure now.

[Deleted User]

Ditch and switch, I have found HBOS and A+Ls customer service top notch, I have had issues with first directs customer service another one to avoid for customer service is abbey national.

Rafter

Looks reasonable to me.

Even on the 2% account you would only be earning £1 in interest on a £1000 balance after higher rate tax.

I'd rather keep free withdrawls and great services for £1 a month to be honest. The sweep feature looks quite neat too - at least any 'surplus' funds in your current account are moved somewhere where you can get a better return.

R.

nettles

Same here. I went to A+L in December, and its been nothing but hassle. It took them 3 months to get the direct debits and standing orders all over, so at first, because theres not much spare each month, I was putting most of it back into FD and just transferring it over once the DD had actually come out of A+L, then in July, despite my biggest SO being set up for 31st of each month (came out on 31 Jan, 28 Feb, 30 Mar, 30 Apr, 31 May and 29 Jun - last working day of each) they decided to pay it early - I got paid on 27 July, so a day or 2 wouldn't have mattered, but they paid it on 24th and I went £12 over my overdraft limit because of it. I got charged £35 for them paying it even though it took me overdrawn and an overdraft fee (I think that was £25). I rang them to complain, as it was their fault, but they said it couldn't be dealt with on the phone, it had to be looked at by a manager and managers don't talk on the phones! They then sent me a letter about 3 weeks ago telling me they will look into it after the test case. I am not trying to claim back bank charges though - just trying to find out why it was taken too early, and they can't even get that right. I will be looking for something else soon because the decent interest rate was a limited time offer too.

Lynette

anandp

For me.....

Pros: £250 interest-free overdraft is useful

Cons: Losing 2% for 0.1% credit interest on my current account. The sweeping facility sounds good, but I proactively manage my funds anyway so would make the transfer of surplus funds into the savings anyway.

I like the increased savings rate, but to be honest, I use a different company for my main savings, and an FD current account was opened to earn some interest while I wait for my direct debits to be applied.

Is anyone moving because of this? I know I am. Just don't know who to yet.

cm233lh

Any further details on this £250 free overdraft. Can I just keep the account overdrawn by that amount? Or is there a catch?

a&akay

Barclays are just as poor but I sweep all monthly pending DDs into my wife's Barclays Esaver account which pays 5% as she is a non tax payer. I have now also managed to move all my DDs to the 28th of the month (£1200 worth). Many companies now allow you to do this online and the rest I did by phone. When my pay goes into our joint account on the 1st I transfer the required total DD funds immediately to her account. Their 'transfer' facilty allows you set up regular payments from the saver on the 27th (or earlier if this is a non-banking day) to cover the DDs coming out of the joint account on the 28th, ie the forget factor is dimished as you can set them up for months in advance. Not the best but saves the hassle and uncertainty of swapping to a best buy current account with the risk of DDs being messed up (and Barclays sometimes have had some good offers eg the recent ISA and Regular Saver if you can take advantage while they are still on offer).