M&S takes on high street banks with new mass market current account

Andrew Hagger of Moneycomms.co.uk looks at the new M&S Bank account planned for launch this summer.

Since the current switching service and guarantee was launched last September there’s been a slight uptick in the number of people moving banks, but that could all change this summer, with M&S planning to launch its first ‘no fees’ current account .

The high street chain launched two packaged bank accounts in September 2012 but disappointingly for many they both came with a monthly fee and with a range of benefits targeted primarily at M&S shoppers.

Later this year M&S bank has said it will launch its first mass market current account.

I think this deal has the potential to drive a lot of new custom from account holders with the big banks who have until now been sitting on the fence, not sure where to switch to for a better deal.

This latest account is simple and transparent and has many positive features that should appeal to a wide range of consumers – in fact there’s not really anything about it to dislike.

For a start the account comes with a £500 overdraft facility of which the first £100 is interest and fee free – a very useful safety net when compared with some of the measly charge free buffers of £20 or less from some competitors.

The interest rate for overdrafts above the £100 mark is 15.9% EAR, one of the most competitive in the market. Also worth noting is that unlike most current accounts there’s no minimum monthly funding requirement for this account from M&S Bank.

Another refreshing aspect of this new account is that there are no unauthorised overdraft charges or fees for returning unpaid cheques or standing orders.

Charges associated with using a debit card abroad is another bug bear with UK holidaymakers and although M&S Bank will charge a 2.75% foreign currency mark up on overseas purchases and cash, at least there are no transaction fees for ATM cash withdrawals when abroad.

There isn’t any interest paid on credit balances however if you use your debit card in M&S stores you’ll earn reward points at the rate of 1 pence in the pound and paid to you quarterly in the form of M&S vouchers.

The icing on the cake is that you’ll also receive a £100 M&S gift card if you transfer your bank account using the current account switch service.

It looks like a good all round package with no hidden nasties and is likely to prove a popular product particularly as it’s backed up with 7 days per week branch banking in 29 M&S stores nationwide and a 24×7 UK call centre.

With Tesco Bank and Virgin Money also due to launch their bank accounts in the coming months, maybe 2014 will be the year that consumers finally have some worthwhile new options to choose from.