Do you pay a monthly fee for your current account, or are you regularly hit with a hefty overdraft charge? If so, you're not alone, as research from Moneyfacts has shown that there's been a clear rise in the cost of some current accounts in the last two years, with both account fees and overdraft usage fees steadily creeping up.
The packaged account arguably kick-started the trend for current account fees, with providers charging customers for added extras such as gadget insurance, breakdown assistance or film rental services. Some high interest current accounts followed suit, while overdraft fees have also been steadily rising in recent years – and these kinds of charges are set to rise even further.
The table below highlights how much bank account fees have increased in recent years, and as you can see, they could certainly be hitting customers' wallets:
Our analysis suggests that 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, fuelling concerns that the end of free banking is nigh.
However, all is not lost. Concerned customers who may now be weighing up the yearly cost of their bank account should remember that there are cost-effective alternatives available, and most of them come from the new kids on the block.
Challenger banks have been taking the banking sector by storm over the past few months, not only by offering highly competitive savings accounts, but by becoming a force to be reckoned with in the current account sector, too. In fact, unlike many well-known brands, challenger banks are actually reducing the yearly cost of their current accounts in order to attract new business, so it could be time to take advantage.
"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," said Rachel Springall, finance expert at Moneyfacts.
"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."
So, is it time to look to alternatives? It could be a great time to do so. Many providers are now offering enticing cashback deals on their accounts to attract new business, while others have additional reward schemes and can even give you access to preferential deals for mortgages and savings accounts, so if you're not happy to pay something for nothing, it could be time to see what's out there.
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Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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