UK Current Account Bank Fees on the Rise

By: MoneyFacts

Recent research by Moneyfacts.co.uk shows that there has been a rise in the cost of some high street current accounts over the past two years, with account fees and overdraft usage fees creeping up.

This upward trajectory is likely to continue into next year, as another high street bank is already making plans to more than double its account fee in early 2016, without offering any extra benefits.

However, all is not lost. Concerned customers who may now be weighing up the yearly cost of their bank account should remember that new banks could offer a cost-effective alternative. Indeed, unlike many well-known brands, challenger banks are actually reducing the yearly cost of their current accounts in order to attract new business.

Rachel Springall, Finance Expert at Moneyfacts.co.uk, said:

“Banks can decide to change the cost of their bank accounts at any time, but if they don’t offer a cheaper alternative, they may find their customers voting with their feet.

“A small rise to a bank account fee may not seem like much, but the yearly cost can soon add up, so if no additional incentives are added, consumers may start to wonder how beneficial their deal is. It’s always worthwhile to take the time to see what deals are available elsewhere, especially as the Current Account Switch Service Guarantee now enables banking customers to switch their provider quickly and easily.

“Challenger brands are fighting it out to offer lucrative deals, with Tesco Bank recently dropping its monthly £5 fee entirely, a move that is likely to attract new business, particularly from customers who are looking for a more cost-effective account for their day-to-day banking needs.

“When Santander ups its monthly account fee next year, it will be unsurprising if customers choose to move to an alternative account, particularly as the likes of TSB, NatWest and RBS now offer enticing cashback deals on some accounts. The new NatWest and RBS Reward Account, for example, is a great deal for customers who are looking to earn rewards for paying bills by direct debit, and with a low monthly fee of £3, this is an attractive offer. If used to its fullest, customers could also get 3% cashback each month, which may negate the account fee entirely.”

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