Paying too much to your bank? A simple switch is as easy as ABC…
You deserve a better deal on your current account, mortgage and credit card
Are you thinking of changing your bank to a rival for a better deal but don’t know what to do? Finance Minister Michael Noonan says he’s pleased with his new campaign to encourage switching through the website www.switchyourbank.ie, which had 12,000 views in its first week online.
The website provides helpful information to support your decision on whether to ‘switch’ with useful links, facts, a stepby-step guide and comparison tools.
Most banks have good points as well as bad ones; yours may be poor in some ways and good in others.
So before giving your bank the old heave-ho, maybe ask what it’s good at – if anything – and where is it ripping you off?
Here’s a guide to the good, the bad and the ugly truths about your bank:
AIB
GOOD: Variable mortgage rates, credit cards BAD: Deposit rates, personal loans
UGLY: Cross-selling mortgage protection and home insurance (like others)
VERDICT: AIB has been behaving itself since becoming a State-owned bank. It deserves some kudos for leading the way with mortgage cuts in recent years while Bank of Ireland stood idly by, although rates are still too high compared to other countries.
Its Click credit card has the lowest interest rate at 13.6% and AIB’s variable rate mortgage is among the lowest (see Best Buys, above).
But it’s still a bank intent on taking as much of your money as it can snaffle out of your purse or wallet.
Like most banks, the gap between lending and deposit rates is reprehensible. For personal loans, for example, it charges 11% while paying savers less than 1%.
It’s also prominent among the banks that inveigle customers into buying insurance products from them at a higher price than they could get elsewhere (cross-selling).
BANK OF IRELAND
GOOD: Fixed rates, cash back mortgage. BAD: Deposit rates UGLY: Variable mortgage rates
VERDICT: Bank of Ireland is too big to bother with the tactics some smaller banks use to win your business. It doesn’t slash variable mortgage rates like KBC – nor does it rely on marketing gimmicks to catch your attention like PTSB.
It’s quite upfront about what it does – offer a great big wad of cash at the start of a mortgage, up to 3% of the total. All it expects in return is that you will pay over the odds for the remaining 30 years or so with its 4.25% variable rate and end up tens of thousands of euros out of pocket. (See Q&As on how you can beat them)
KBC
GOOD: Personal loans, variable mortgage rates, free day-to-day banking for over-60s BAD: Only 15 branches UGLY: Luring savers with high rates only to slash them later VERDICT: Many foreign-based banks left us after the financial crisis. But thankfully, we still have competitive KBC.
It often eschews gimmicks with deals that are simple enough for most people to understand, such as its low mortgage rates. It also has the lowest personal loan rates among banks at 6%.
KBC’s credit cards are relatively good value with the second cheapest rate and a 0% introductory interest offer over 6 months for switchers.
However, it is still a bank and gets up to some of the same tricks as any other by offering high deposit rates only to slash them later when enough business is onboard, as revealed elsewhere on this page.
If you like doing business in a bank branch (i.e. queuing for ages and being dealt with by a clerk), then KBC is not for you as it only has 15 outlets countrywide.
That’s not necessarily such a problem for younger customers or computer-literate older ones who bank online, as KBC’s digital platform is good. But it can also be a hassle to get large sums out in a hurry as KBC ‘hubs’ don’t seem to provide things like large wads of cash or bank drafts without a bit of a rigmarole.
PTSB
GOOD: 2% cash back deal on mortgages. BAD: Variable mortgage rate of 4.25% UGLY: Marketing gimmicks
VERDICT: PTSB’s 1.1% deposit rates over three and five years are better than most but hardly much to get excited about.
It also deserves some credit for its free-banking for over-60s (like KBC). And PTSB pays 1% interest on all amounts below €1,500 in one of its current accounts.
But because it’s small compared to AIB and BoI, it relies too much on marketing gimmicks.
For example, PTSB appears to offer a 3.7% mortgage rate.
But this is because it’s a oneyear ‘discount’ rate. After a year, you get one of the dearest variable rates on the market: 4.2%.
There’s also the current account that pays you every time you make a purchase – but only up to a maximum of €5 a month, most or all of which is taken back with a high quarterly charge.
ULSTER
GOOD: Variable mortgage rate, credit cards
BAD: Free-banking age threshold increased to 66 (following AIB and BoI) UGLY: Looming branch closures
VERDICT: Ulster has regained a competitive edge with the cheapest variable mortgage on the market. This is the product that really counts – even a small difference in interest rates costs tens of thousands over the lifetime of a loan.
But Ulster plans to shut 22 branches – and it didn’t have that many to begin with. One in five will go. It also recently raised the age threshold for free banking to 66, which also counts on the negative side of its balance sheet.
CREDIT UNIONS
GOOD:: Badly needed community banking with some great deals.
BAD: The best ones are offered by wealthy unions.
UGLY: There isn’t really anything ugly, but for a movement based on communal values, there appears to be a shortfall in progress and co-operation nationally.
VERDICT: Credit unions have a lot to be proud about.
They can offer some tasty deals too, including the cheapest mortgages, fixed for up to 10 years at 2.9% and up to 2% interest on savings. The average savings rate is 0.6%, which still beats the banks.
Some unions are on top of their game in banking terms, but others have yet to offer the kind of services we have been hoping to get from them for over a decade.
Whether the movement as a whole can yet provide a viable alternative to banks is questionable. See your local branch.