FOOL'S EYE VIEW
Eight Ways To Fleece Your Bank!

By Alison Hunt (TMFAlly)
September 13, 2005

One thing that we learn from a relatively early age is that you can never really get the better of banks. After all, although they may pay us a little interest in order to store our money, we know that should we need to borrow any we'll be charged far more. Plus if we slip up at all our banks are all too quick to slap hefty fees on us. The banks always seem to win.

Well that always used to be the case - but times are changing. The Internet has opened up a whole new world for financial institutions to provide online banking, providing us with more choice and meaning that we don't need to turn to High Street banks for their services, anymore. What's more, in order to attract our custom a number of banks are waging "current account wars", offering a whole host of freebies and extras as well as a superior account package to tempt you to them - with some even offering cold, hard cash!

However, even though many of us are unhappy with our banks, only one in twenty switches a year. So why is this? Misplaced loyalty for all those years of earning a pittance in interest? Worries about the new bank losing a direct debit? Well, it's worth remembering that changes to the Banking Code in 2003 have made it far easier for us to switch. There are strict time limits on how long banks must take to move our details and any charges or fees caused by undue delays must be waived. So you've got nothing to lose, but quite a lot to gain!

So if you fancy claiming some free money, an interest-free overdraft or you'd simply like to earn a decent rate of interest, we'll show you how!

1. Cheaper Borrowing

If you're currently paying a fortune in interest payments to your bank for the personal loan you took out ages ago, have you checked if your rate is competitive? And are you paying for the hideously overpriced loan protection insurance? A number of us don't need it and many of those that believe it's useful could find self-insuring a better option. Loans from High Street banks can be as high as 20%, whereas a loan from an Internet bank, such as Moneyback Bank can be as low as 5.5%. Switch your loan without delay and save a packet in interest.

Find a cheaper loan or apply for a Moneyback Bank loan in our Personal Loan Centre.

2. Claim free cash

Yes, there really is free cash on offer, simply for switching your bank account. Switch to First Direct or Lloyds TSB and once you've arranged to have your salary/income to be paid in you'll receive £50. Move to the Citibank Sterling account and do the same thing and you'll get a whopping £75. And if you know someone with an Alliance & Leicester (A&L) Premier Plus account, ask them to recommend you and you'll both earn yourselves £50!

You can apply for the A&L, First Direct and Citibank accounts in our Banking Centre.

3. Earn more interest

If you currently keep your cash in a High Street bank account, chances are you're earning next to no interest. Rates of 0.1%AER are the norm with Barclays and NatWest amongst the biggest culprits. If you're one of the many who likes to keep a healthy balance in their current account, you're missing out on a fortune in interest. An average balance of £1,000, for example, would earn one measly pound in interest each year - and that's before tax!

However, not all current account providers are so mean. Sign up for one of the following accounts and as long as you can pay in at least £1,000 per month, you'll be earning the following interest rates on your money:

Provider	Account	Interest/AER on £1+
Alliance & Leicester (apply via the Fool)	Premier Plus	5.0% (fixed until 30.9.06)
Cahoot (apply via the Fool)	Current	4.0% w/o chequebook 3.9% with chequebook
Lloyds TSB	Classic/Classic Plus	4.0% on balances up to £5k 0.1% on balances above £5k
Smile (apply via the Fool)	Current	3.3%
Nationwide (apply via the Fool)	FlexAccount	3.0%
Halifax	Current	2.53%

Source: Moneyfacts

That balance of £1,000 could now be earning up to £50 per year - that's 50x more interest than before!

4. Earn cash whilst spending

If you feel like you spend most of you life handing your debit card over to retailers, how would you like to earn money at the same time? Yes, really, by switching to the Halifax Moneyback current account and paying in at least £1,000 each month, you will earn cashback every time you use your debit card. The first £10,000 spent per year will earn 1% cashback, with subsequent spending earning 0.1%. So that's a potential £100 to be earned if you spend £10,000 and you'll also earn interest at 0.5%AER, too!

You can apply for the Halifax Moneyback account in our Banking Centre.

5. Free overdraft

If you're one of the many people that find themselves slipping into the red each month, you'll certainly know all about the wrath of banks - especially if you haven't had your overdraft approved. Unauthorised overdraft rates can be as high as 30% EAR - and many banks will charge a fee, too, just to make sure you really feel the sting! You may not realise it, but these charges soon add up.

However, did you realise that there are ways to have an overdraft and pay nothing for it? Not even interest! Yes, believe it or not, a number of banks are offering overdrafts for absolutely nothing for up to a year, once you've arranged for your salary to be paid into your account.

Take out the Alliance & Leicester Premier Plus account (as mentioned previously) and you'll get a 0% overdraft for a whole year, reverting to 7.9%EAR after this time. Citibank is offering a £1,000, interest-free overdraft buffer for twelve months (9.9%EAR after this). And Barclays Additions plus current account is offering a ten-month, interest-free overdraft, matched to your current overdraft (9.9%EAR after this time). It's worth remembering, however, that the Barclays deal is a packaged account requiring a monthly fee of £12, although it promises to refund the first ten months' worth of payments.

You can apply for the A&L and Citibank accounts in our Banking Centre.

6. 0% Credit Cards

If you're still nursing the credit card you had six or more years ago, you should realise that times have moved on! You're probably not getting a great deal anymore so why not consider switching your card for a more lucrative number?

We're now able to take out 0% cards for balance transfers, new purchases or both, meaning that for many of us there is simply no need to pay interest on credit card debt. The Halifax One card is offering up to twelve months, interest free, for balance transfers, although it does charge a 2% balance transfer fee. You can find a number of cards which still don't charge this fee, here. By transferring your balance to a 0% card you can save yourself a fortune in interest and use that cash to really knock down your debt. And if you aim to pay off that balance before your 0% period expires, you'd never have to pay interest on that debt again!

Find yourself a 0% credit card deal in our Credit Card Centre.

7. Tax

Although not strictly a way to get more from your bank, everyone benefits from paying a little less tax. Stashing your savings into a mini-cash ISA is one of the most obvious methods; these accounts generally pay high rates of interest (First Direct is currently paying 5.5%AER) and the interest is received, tax-free. Higher rate taxpayers, in particular, get a great deal from cash ISAs - savings of £3,000 in an account paying 5%AER would earn £150 per year in a cash ISA, or just £90 in a savings account. National Savings and Investments offer a number of methods of saving without paying tax and Premium Bonds pay no interest, but reward lucky bond holders with winnings of up to £1 million each month.

8. Bank Account Extras

So, as you can see some accounts will offer free overdrafts, great rates of interest and cash incentives to move, to boot. However, there are a number of freebies available, on top of these deals. Alliance & Leicester Premier/Plus account holders need never pay for travel insurance again as their account gives them a free, annual worldwide policy. They can also upgrade to include their family for £48 per year. The Barclays Additions plus current account goes one better, offering free, worldwide family travel insurance and also free Green Flag breakdown cover. However, as mentioned previously, you'll have to pay that £12 fee each month for this account which will only be refunded for the first ten months.

And if you travel regularly, you should definitely consider the Nationwide FlexAccount as it offers free cash withdrawals, worldwide.

You can apply for the A&L and Nationwide accounts in our Banking Centre.

So there you have it, eight ways to get the most from banks! Are you getting as much out of your bank as you should?