UK banks welcome the Spanish revolution

Spanish bank, Santander, which owns the Abbey has made a groundbreaking move which could signal the end of rip-off charges for millions of bank customers.

The new Zero Current Account has no penalty fees for overdrafts or bounced cheques, and no charges for withdrawing cash overseas. No charge for foreign exchange is another attractive proposition to customers who have become heartily sick of the great British banking rip-offs of late.

An interest rate of 12.9% however is to be charged on all authorised and unauthorised overdrafts, and the options are only available to customers who have a mortgage with the bank.
Experts have welcomed the move, but have warned that millions of people will miss out if they are already tied to loans. The launch of the new Zero account marks a dramatic shift in an industry that has been crippling its customers with fees, and which has been the subject of much adverse publicity.

Some of the most expensive fees previously saw bank customers being charged £39 for a bounced cheque and a £30 charge every time an account exceeds an overdraft limit. These charges made the current account market worth over £8bn a year, which worked out at over £150.00 per current account.

The Zero Current Account will be introduced on January 11th next year, when both Abbey and the Bradford and Bingley will be rebranded as Santander. From that date mortgage customers will be able to switch for free, but Alliance and Leicester customers will have to wait until the second half of the year.
Over two million Abbey customers who have mortgage accounts will be able to open the Zero account, and just 250,000 currently have their main account with the bank.

On the down side, younger account holders who cannot afford to take out a mortgage, or older bank customers who have paid off their mortgage will not be eligible to open a Zero account.
A banking specialist said: ‘the clear message is that if you want to have free banking you have to pay for it by having a mortgage. It is a strategy that will effectively allow Abbey to cherry-pick customers.’

The move is likely to see many other major banks follow suit which can only be a good thing for British consumers. The Santander is now the fastest growing bank on the British high street after it bought Abbey in 2004, followed by the Alliance and Leicester and Bradford & Bingley´s savings business and its branch network in 2008.

Halifax has now said it is planning cheap deals for customers who have a current account and mortgage with them in the New Year. The Halifax is part-owned by taxpayers and Lloyds. With 22 million accounts, The Halifax angered customers after changing its overdraft charges recently. Customers with authorised overdrafts must pay £1 per day and those with unauthorised overdrafts pay £5 per day.

With the launch of Santander´s Zero account, other major high street banks and building societies should start to offer more competitive rates, which is great news for bank customers throughout the UK, who will no doubt welcome the Spanish Revolution!