Browse Sections

• Personal finance 
• Health and beauty
• Dating
• Holidays
• Hotels
• Food and drink

Best of the banks?

Martyn Hocking (Editor, Which? Money)
1/ 9/2008

BARCLAYS, HSBC, Lloyds TSB and NatWest all offer below average customer service, according to the latest Which? Money current account survey.

They also continue to offer paltry amounts of interest on credit balances.

Despite this, just 18 per cent of the Which? members surveyed have ever switched current account. If you are putting off switching because you think it will be difficult, don't. The majority of Which? members who have done so (74 per cent) found it either very or fairly easy.

CUSTOMER SATISFACTION

The four banks with the highest overall customer satisfaction ratings in our new survey are Smile (with the top score of 88 per cent), First Direct (85 per cent), the Co-operative Bank (82 per cent) and Cahoot (82 per cent). Nationwide and Intelligent Finance also did well, with scores of 79 per cent and 72 per cent respectively.

At the bottom of the heap this year are Abbey (44 per cent) and Clydesdale Bank (45 per cent). Both of these were among the lowest performers last year.

The big four banks have failed to score well again this year and were all rated below average. Lloyds TSB achieved a 59 per cent satisfaction score, NatWest 58 per cent, HSBC 57 per cent and Barclays 53 per cent.

In our survey, the aspects of service that Which? members were most happy with were accuracy of standing orders and direct debits, and accuracy of statements. Two thirds said they were very satisfied in both areas. The aspect people were least satisfied with was the amount they are charged for exceeding their overdraft limit. Only eight per cent said they were very satisfied with the charges they were paying, while 26 per cent said they were very dissatisfied with them.

EARNING INTEREST

Banks must also offer attractive rates of credit interest on their current accounts and good-value overdrafts to be considered as potential Which? Money Best Buys. Many banks offer a measly 0.1 per cent interest on credit balances. Overall, only nine per cent said they were very satisfied with the amount of interest they earn on their current account.

If you have an account that offers 0.1 per cent interest on credit balances, you would earn just 40p in a year, if you're a basic rate taxpayer with an average balance of £500 in your account each month.

You could earn £34 - an extra £33.60 - if you had an Alliance & Leicester Premier Direct account.

OVERDRAFTS

Northern Rock offers one of the worst deals for overdrafts. You would pay £29 over a year if you had a £100 authorised overdraft for one week every quarter with the bank, and £110 a year if you had a £500 authorised overdraft for two weeks a month. Best Buy Cahoot is the cheapest bank for overdrafts - you would pay nothing for the smaller of these overdrafts and £21 a year for the larger one.

MOVING YOUR MONEY

Despite the financial (and customer service) benefits of switching current account, only two per cent of Which? members switched in 2007. The most common reasons given for not switching were that people were worried about standing orders and direct debits not being paid (38 per cent), that changing accounts appears to be too complicated (35 per cent) and that it's not financially worthwhile (33 per cent).

Our Best Buy current accounts pay up to 85 times more interest than many others, including most of the accounts offered by the big four banks.

What's more, three quarters of the people who have switched found it easy. Under the Banking Code current-account providers must help you to switch. Your new bank will ask your old one for a list of your standing orders and direct debits, which it must provide within three working days of receiving the request. Your new bank must allow you to use your new account within 10 working days of approving your application. You will also not have to pay any bank charges that result from mistakes or delays during the switch.

BEST BUY CURRENT ACCOUNTS

1) SMILE
Overall customer satisfaction score: 88%
Internet satisfaction: *****
Telephone satisfaction: ****
Credit interest: 2.27%

2) CAHOOT
(2008 Which? Award winner: best current account)
Overall customer satisfaction score: 82%
Internet satisfaction: *****
Telephone satisfaction: n/a
Credit interest: 3.65%

3) NATIONWIDE FLEXACCOUNT
Overall customer satisfaction score: 79%
Internet satisfaction: ****
Telephone satisfaction: n/a
Credit interest: 2%

4) INTELLIGENT FINANCE
Overall customer satisfaction score: 72%
Internet satisfaction: ****
Telephone satisfaction: ***
Credit interest: 2.25%

5) ALLIANCE & LEICESTER
PREMIER DIRECT
Overall
customer satisfaction score: 64%
Internet satisfaction: ***
Telephone satisfaction: ***
Credit interest: 8.5%
(n/a = full service not offered)