15th May 2014
M&S Bank is launching its first fee free current account with experts saying it could shake up retail banking. The account has an automatic £500 overdraft, the first £100 of which is interest-free and the remainder is charged at 15.9 per cent (Equivalent Annual Rate). There are no overdraft fees and customers will receive free text alerts as they approach their overdraft limit.
The bank says the overdraft works out considerably less than the average current account. For example, on its calculations it says the annual cost of using the M&S overdraft for £600, seven days per month, would be £18, compared to an average of £56.10** across the market with an average calculated across 16 current account providers).
It will not charge an ATM transaction fee for withdrawals abroad made with the M&S debit card.
M&S Current Account customers will earn loyalty points on their M&S debit card spend, with one point earned for every £1 spent in M&S (both in-store and online). Customers receive £1 in M&S vouchers for every 100 points earned and points are automatically converted into M&S vouchers and sent to customers each quarter
Customers will also receive a £100 M&S gift card once they’ve switched their current account using the Current Account Switch Service. In addition, M&S Current Account customers can also benefit from exclusive offers on selected M&S Bank products.
Sue Fox, CEO of M&S Bank, says: “M&S Bank brings the trusted Marks & Spencer brand values to banking, delivering a new choice of bank on the high street, and the new M&S Current Account combines a transparent account structure, debit card reward points, and the great customer service you’d expect from M&S.”
M&S Bank branches also offers a pager service so customers can shop until the bank staff are free.
Jafar Hassan, personal finance expert, at uSwitch.com says: “This is not just any current account. This is the M&S current account. Whether it will be a credible threat to high street banks remains to be seen, but it certainly has the potential to shake up the retail banking industry.
“With Sainsbury’s and Tesco focusing on online banking and traditional banks actually closing down branches on the high street, M&S is offering customers the chance to bank and shop under one roof. The ability to manage your money at an M&S store could be very appealing to loyal shoppers, especially with many branches open in the evenings and at weekends.
“As well as being offered face-to-face banking, customers will receive loyalty points when they spend on their debit card, plus the added sweetener of an £100 gift card when they switch. They will also benefit from an automatic £500 overdraft, although only the first £100 is interest-free – compared to First Direct’s 1st Account, where the first £250 is interest-free. People happy to do their banking online or over the phone should also consider accounts such as Nationwide’s fee-free FlexDirect, which offers in-credit interest of up to 5%.
“We’ll wait and see whether this new account from Marks send sparks flying. But with this account almost open for business and more to come from other retailers such as Tesco and Sainsbury’s, it’s clear that the dominance of the Big Four is being seriously challenged. It will be interesting to see if some of the larger players start upping the ante in the next few months in an attempt to prevent customers from switching.”
Customers can apply for the account online (www.marksandspencer.com/bank) in-branch or via M&S Bank’s 24×7 UK-based contact centre.