This morning the Post Office announced details of its much awaited foray into the UK current account market.
The initial rollout of the three new current account options will be run as a pilot in 29 branches across East Anglia before being rolled out to the rest of the country in 2014.
Consumers will be able to choose from a Standard account, a Packaged account and a Control account.
The Standard account comes with a debit card and can be opened with a balance of £100. There’s no interest paid on credit balances however the authorised overdraft interest rate of 14.9% EAR is amongst the most competitive on the market. It’s good to see that Post Office hasn’t gone down the route of daily fee charging for overdrafts and also that there will be no charges for unauthorised overdrafts.
The Packaged bank account charges £8 per month and includes European multi trip travel insurance and Vehicle Breakdown Cover – the full details of these policies have not yet been released so it’ll be interesting to see how comprehensive these add-on products are and how they stack up against competitor products. Again the interest rate for overdrafts is a very impressive 14.9% EAR.
The Control account is aimed at those who don’t want to incur expensive unauthorised banking fees and unpaid charges. This account costs £5 per month and whilst it gives people access to online banking, telephone banking and a nationwide network of ATMs, there is no debit card available with this account. Avoiding unpaid fees may help some people, but others are likely to balk at paying £60 per year for a basic bank account.
There’s nothing particularly exciting with these products, but then many people are just looking for something that does the job, no bells and whistles, just a no-nonsense account without hidden or excessive fees, all backed up with consistently good customer service and a system that doesn’t keep falling over due to IT issues.
There’s no reason why the Post Office shouldn’t become a major competitor in the current account market, but much will depend on its ability to build a reputation for reliable customer service across its huge network of 11,500 branches.