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MONEY COMMENT
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The big high-street banks rarely win awards for popularity. In fact, I wouldn't recommend having a relationship with any of them, with the honourable exception of HSBC (LSE: HSBA)(NYSE: HBC), which is the best of a bad bunch. In my opinion, every bank is inferior to Nationwide BS, the UK's largest building society and one of my favourite high-street providers (learn why in this article). About the only thing high-street banks have in their favour is a convenient branch network. As it is, we'd almost always be far better off buying financial products from other sources, such as telephone and online banks, building societies, discount brokers and financial websites (not forgetting the Fool, of course!). Here are five cunning stunts that the banks like to pull on us: 1. Charging us too much to borrow The base rate is 3.5%, so double it and you should make money lending at 7%, right? Spot on, but most high-street banks charge around 15% on personal loans and sell us rip-off loan insurance. What's more, there are around fifty credit cards charging no interest on balance transfers for up to six months, whereas the high-street banks charge standard interest rates of 18% or more. Kick their expensive borrowing products into touch! 2. Pushing awful investment products Many mis-selling scandals here: mortgage endowments, high-income 'precipice' bonds, guaranteed equity bonds and so on. Many retired people are not ideal candidates for full-on stock-market risk, yet I was talking to the Fool's editor the other day about some elderly relatives of mine who had been sold entirely inappropriate investments by a high-street bank. My boss replied with a very similar story concerning one of his relatives. I'm furious that so many elderly people have been duped by unprincipled salespeople, usually in a desperate attempt to meet impossibly high sales targets. Investments from the high-street banks are generally poor value for money, combining as they do high charges and poor investment performance with inflexibility and acres of small print! If you want a simple, low-cost, stock-market investment for the long term, try an index tracker. 3. Big bank, even bigger mortgage rate Don't even get me started on the excessively high standard variable rates that big mortgage lenders charge – of the high-street banks, only HSBC/First Direct made it into the top ten! There are over a hundred lenders and around 7,500 mortgages (fixed, discounted, capped, tracker, cashback and flexible and offset deals) impatient for your business, so switch and save today. 4. Flogging us iffy insurance policies I'm not talking about the dreadful endowments pushed on us for the last twenty-odd years, although the banks are among the very worst offenders in this respect. No, I'm talking about the way that the banks systematically offer over-priced home, motor, life, travel and payment protection insurance. The simple solution is to shop around and save thousands. 5. Giving us shoddy current accounts When our bank accounts are in credit, most high-street banks pay us a meagre 0.1% interest. However, if we dare to slip overdrawn, we find ourselves paying extortionate rates of up to 30%+ APR. And woe betides anyone who exceeds his/her overdraft limit and is rewarded with punishing charges that mount up like crazy! This is daylight robbery, especially when compared to the best direct and online bank accounts, which pay thirty times as much credit interest and charge as little as 8% for overdrafts. No contest, in my Foolish opinion. Better Credit Cards & Loans | Index Trackers | Mortgages | Insurance | Bank Accounts.