A leading financial analyst has warned consumers that the current trend for banks to offer their existing customers various deals may not necessarily be beneficial to them.
This is true of many financial products including credit cards the analyst claimed.
Halifax has become the latest big name high street bank to join the raft of financial institutions and building societies currently offering special mortgage deals to their existing current account customers, says leading financial information group Defaqto.
Other mortgage deals, such as the one offered by Nationwide Building Society, offer current account holders everything from free valuations and cash-back options, to preferential rates and the chance to borrow a higher proportion of a property’s value.
David Black, a banking specialist at Defaqto, said: “Banks see the current account as the main relationship builder with the customer and it also enables them to have a much better understanding of the financial capabilities of each customer.
“The cross-selling of other products on to the existing customer base is destined to become the key battleground as each bank strives to become the one-stop shop for all the personal finance needs of their customers,” he added.
In the midst of the financial crisis, banks are playing it safe by selling products to existing customers whose finances they already know about. They are also hoping to avoid their customers searching for better deals elsewhere on easily accessible price comparison sites.
That the banks are concerning themselves with this is telling in itself, and suggests customers should make more of an effort to shop around.
“If you have a good credit rating you’re much better off not being loyal to anyone, because of all the introductory offers around,” Black agrees.
January is seeing the usual rash of credit card companies offering various incentives to new customers. Consumers making the most of these and frequently switch providers will get the best rewards. The offers are created to get consumer attention rather than keep them loyal.
Typical offers include 0% on purchases or special rates for balance transfers. Applying for the Virgin credit card for instance will guarantee you 0% balance transfers for 16 months – it’s the only credit card in the UK to offer a 0% promotional period of this length.
Other cards offer incentives such as cash-back on purchases for a set period of time. The American Express platinum cash-back credit card offers five per cent cash back up to £100 over the first three months.
Alternatively, the Egg credit card can get you up to 25% off shopping discounts when you shop online with selected retailers and also enables you to earn up to 10% cash-back.
The same advice applies to savings accounts, Black adds. Customers should avail themselves of any chance to shop around that they can to get themselves the highest interest rate.