First Direct revamping current accounts

[Deleted User]

You will have issues switching DDs between any banks because saometimes the utility companies etc arnt particulary switched on, company HR departments re switching wages are probably the biggest nightmare going. But i will point out last time I switched the A+L mortgage payment went through straight away, EDF energy and first direct credit card (which IS HSBC/first direct) were the biggest pains and completely messed it up, HSBCs customer service was terrible i had to phone them 10 times over 2 months and fill our the form 3 times!!!

johnofhertford

I'll lose less than a pound in interest every month, but save £2.50 per month because txtmsg banking will be free. So no need to switch. And I could call them at 2 in the monring to tell them if I wanted to.

deano8000

After being with first direct for 15 years there service is alot better than when i banked with natwest and barclays. Like john i like the sound of free text message banking and not really bothered about a little bit of interest as i would keep most of my money in savings. Looking at the letter i got there doesnt seem to be any catches with the £250 free overdraft limit no debit interest to pay and it looks like if you go over it once in a 6 month period as ive done before your not getting charged as such. might stick around with them abit longer.

jmfwilts

I'm leaving First Direct now. 2% on my current account was already poor, but I didn't mind as the service was good. I'm now going to move to Nationwide - the interest rate isn't market leading but they have a good reputation. I also travel abroad a lot so I should benefit from the free cash withdrawels. I think FD are going to lose a lot of customers like me who have been wavering for sometime about switching. Now is the time!

[Deleted User]

Note that the credit interest rate after 1 November will be nil. But surely most people will be better off if they use even one or two of the services available:

Let's say you have an average balance of £1,000 currently, so after basic rate tax your credit interest is 0.02*0.8*1000 = 16.00 per year (lost)

1. If you use the Regular saver account paying 8%, saving say £80 per month (max is £300 per month), your average balance over the year would be £480 and interest roughly 0.08*0.8*480 = 30.72 (gained)

2. If you actively use the new esaver account paying 5.37% (gross) and manage to keep an average balance of £500 (remember I used an average current account balance of £1000 above), interest would be 0.0537*0.8*500 = 21.48 (gained)

3. If you want or use text message banking, you're saving £2.50 a month = 30.00 (gained)

4. The interest free overdraft if used for 1 week a month is worth 250*0.129*12/52 = 7.44 (interest charges saved)

I don't work for first direct but I do have an account with them and overall think the changes are a good thing. New card looks nicer too.

moggsy

@ anactuary

1. But your savings are locked in for a year.

2. There are savings accounts paying higher interest available.

3. Text message banking was completely free, then they started charging for it and now they're giving us a fantastic deal by giving it to us for free again. It's a common ploy and one which most people will see through.

4. A lot of FD's customers will have no need of an overdraft, interest free or otherwise.

All FD really have left to offer now is their excellent customer service. But I'm not sure this is enough as there are other banks out there who offer similar levels of service but pay decent interest on their current accounts.

I'm wavering at the moment but on the whole I suspect I'll being closing my FD accounts and moving to Smile.

KiKi

I will keep my FD account - I only use a current account to pay direct debits, so the money goes in for a few days and leaves again. I always, always immediately take out the spare cash and transfer to a high paying savings account anyway.

So 2% to 0% makes absolutely no difference, except a few pence which I'll live with. I'd far rather they put their money into higher interest savings accounts!

I also appreciate their customer service; having experienced a number of other accounts, this one is definitely the one for me!

CopperPlate_2

Having an offset mortgage with fd, it makes no difference whatsoever that the interest rate on my current account is going to be nil - I don't get interest on my savings or current account as they offset the mortgage. The IFOD also isn't going to affect me at all. I didn't join them for their interest rates - their customer service and attention to things is what swung it for me. If only other organisations could be as proactive and customer focused. It might be all part of their big plan whatever that might be.

I remember reading, last year at some point, that the customer profile of fd customers was 'cash rich, time poor' - which if you think about it sums up the moves quite neatly. Text message banking for free and no interest, automatic sweeps of money into other accounts, etc. They look like they're not overly bothered if some customers close their accounts and move on. Bit like when they brought in their £10 fee.

Andreg

Firstdirect's accounts now can both be offset against a Firstdirect offset mortgage. Can the new '1st account' be offset? If so, this effectively gives credit interest equivalent to roughly 7%.

CopperPlate_2

Yes it can and will be. I received the same message as everyone else. Effectively it's really just a name change other than I'll get text banking for free (as I have firstdirectory just now, the price of that will also come down too). There is very little change for me as an offset mortgage holder where I offset my current and savings accounts. Some of the new accounts - like regular saver - can't be offset I don't think.