New current accounts hit the market, shake up competitors

Business banking news review: week ending 13 March 2014

This week was a big one for anyone looking for a current account, as not one but two banks have shaken up their rivals with some very specific offerings.

First we’ve got another entrant into the market from the retail sector. Much as how Tesco Bank has been making strides into becoming a full-figured financial services provider, it looks like Marks & Spencer has decided to follow in its footsteps. The banking arm of M&S has announced that it’s coming out with a ‘fee-free’ current account this summer, and it seems to be loaded with all sorts of excellent features.

So here’s what you’ll get for switching to this new M&S Bank current account: right away you’ll receive a £100 M&S gift card if you switch from your existing bank. On top of that there’s no requirement for a minimum monthly deposit, there’s a rewards scheme and a low charge for using ATMs overseas, an overdraft deal available, and the all-important no fees as long as you stay in credit.

It sounds like an all around fantastic deal, which makes me think there must be something wrong with it somewhere. I suppose I’m just suspicious of what sounds like good news for consumers. Speaking of good news, there’s even more from Santander, as it just launched its new current account offering as well. However, this one is targeted at children.

Called a ‘mini’ current account, the new 123 Account for children from Santander carries an actually impressive 3 per cent interest rate on any balance of at least £300 and up to as much as £2,000. It can be taken out in any child’s name from birth to the age of 11 and managed as a trustee; from 11 to 18 it’s in the child’s name directly and he or she has full control of it. This also comes with a debit card as well, though I don’t know if I could have been trusted with a debit card at the age of 11.

Better yet there’s no fees, no charges, and interest is tax-free until the account holder reaches the age of 18. At that point, the account matures into an adult 123 Account in order to make the transition as painless as possible. Again if it seems like baby’s first current account, that’s because it is; with its high rate of return it’s quite competitive with the offerings from other banks. I just don’t know if it’s a good idea to provide children such financial freedom. I know I would have mucked about like mad if I had that much cash at my disposal as a child!

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