Banking News Is HSBCs Interest Free Current Account The Beginning Of The End For Free Banking 2150

Is HSBC’s interest-free current account the beginning of the end for free banking?

01 September 2008 / by Rebecca Sargent
HSBC has become the first UK bank to withdraw interest from its fee free current accounts. New customers seeking a fee free account from today will find that HSBC no longer applies interest to its basic current account.

According to HSBC, research has shown that, “customers simply do not value the 0.1 per cent credit interest” that was formerly offered with the current account.

Ever since the Office of Fair Trading (OFT) launched a court case against the main high street banks over ‘unfair’ overdraft charges, banks have threatened the end of free banking, and this move from HSBC is being viewed as the first step.

MoneyExpert.com’s Sean Gardner, commented that “the worry is that this, along with others such as Barclays making similar moves, is the beginning of the end of free banking.”

According to HSBC, the new current accounts – which old customers will be transferred to on December 1 – are better suited to consumers due to the provision of free mobile banking and ID theft assistance.

However, these features are only available to those who credit their accounts with at least £500 per month and qualify for the HSBC Current Account Advance.

HSBC general manager Carlos Wanderley, added that, “the new current account will suit customers whose primary banking relationship is with HSBC and who will be using the account on a regular basis.”

However, Mr Gardner views the new accounts as simply “another blow for customers and hardly compensated by ubiquitous, low value features such as ID theft assistance.”

Mr Gardner also advised consumers to compare current accounts and look elsewhere to a number of current accounts that do offer good returns, such as Alliance & Leicester and Lloyds TSB.

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Written by Editorial Team