Don’t you want my custom?

I made a momentous decision today. I decided to do something which, statistically speaking, you’re less likely to do than divorce your spouse.

So what have I decided to do?

Take up brain surgery?
Climb Mount Everest?
Swim the Amazon?
Run for US President?

What can this rare event be?

Simple. I have decided to change my current account.

Why don’t people change their Current Account provider?

A survey by Santander in 2010 found that britons stay with their bank longer than their partner. It says the average UK citizen has had their current account for around 16.5 years.

Ask anyone from a previous generation and they are likely to confirm that they have never changed banks. They probably opened their first current account when they started working and they have been with the same bank (or building society) ever since. **

Granted, years ago changing your current account was a pain the the proverbial. But these days banks and building societies offer “switching” services which will take care of updating your standing orders and direct debits. They will even contact your Employer and arrange for your salary to be paid into your new current account.

But people still don’t seek out a better deal. Why?

Customer inertia.

Switching Current Account Provider

So why have I decided to do what some many others choose not to. Switch current account?

First off, I must say that this decision hasn’t been made because of problems with my existing Current Account provider. Far from it. I have been with the same bank since I started working (** see, I told you!). I cannot think of a single occasion on which I have had to complain. A rarity these days.

My decision is simply financial led. My Current Account doesn’t pay interest. Unlike the majority of current accounts, I suspect, I usually have a significant amount of money in my Current Account for one reason or another. Money which isn’t earning a Penny in interest.

Having looked around and found only a small number of providers offering me any sort of return on the money in my day-to-day account I decided that Lloyds TSB were to get my valued custom.

The two other options I discounted were Santander‘s 5% offer as I had a similar account with Alliance + Leicester before they were taken over by Santander, so I don’t think I can apply for another of these types of account with them. And The Halifax Reward Current Account which pays £5 into your account each month as long as you deposit at least £1000 per month (actually, I already have one of these accounts – and I intend to write an article called “How to make money from current accounts” one day soon so I won’t go into detail here).

Lloyds TSB Classic Current Account with Vantage

So Lloyds TSB it was then. Their Classic Current Account has the option of “Vantage“. Vantage is an option which can be added to their Current Accounts and pays tiered interest as long as you deposit £1000 per month into the account (whether than be your salary or simply an amount transferred from another account).

The terms and interest payments made to Vantage account holders changed earlier this year, but they currently pay the following interest rates:

And the Lloyds TSB website confirms that:

“Interest rates apply to your whole balance. For example, if you have £4,000 in your account you will receive an interest rate of 3.00% AER on your entire balance.”

So, deposit £5,000 into a Vantage account and you will get 3.00% (AER) on the whole balance. Effectively an instant access account paying 3.00%This can be beaten by just a few providers’ instant savings accounts. For instance:

• The Poppy Saver from the Coventry Building Society paying (though you can only make 4 fee-free withdrawals per year). The account pays interest at 3.15% AER/Gross p.a. (variable) including a first years bonus of 1.15% AER
• The Online Saver from The Post Office (3.01% gross/AER variable, unlimited withdrawals – includes 1.36% gross/AER fixed interest bonus for the first 12 months)
• Santander’s Instant Access eSaver account (issue 4) paying 3.10% gross/AER (variable) (includes a variable rate bonus of 2.60% gross/AER (variable) for the first 12 months from account opening).