Banks are trying to outdo each other with interest offers to tempt you to switch your current account, writes Laura Slattery
Personal current accounts are the most commonly held financial product but, in general, they are the financial product to which people scarcely give a second thought.
It is only when things go wrong - sudden unauthorised overdrafts, standing orders that go haywire, suspicious withdrawals and other fun things - that most consumers start to question their choice of current account provider.
That's good news for the big boys - AIB and Bank of Ireland - which between them hold about 75 per cent of the market and would like to keep it that way.
The smaller players, however, have been snapping at their heels recently with a combination of cash offers, promotional rates of interest on credit balances and "packaged" accounts with additional financial benefits.
This week, Halifax joined the fray with the launch of its long-awaited personal current account, which pays 10 per cent interest on credit balances of up to €2,000. The rate is not an introductory offer, according to the bank, and will be payable to all customers who make minimum lodgements of €1,500 a month.
This means that a substantial chunk of the population who direct their salary into a current account will qualify for the 10 per cent rate, including people on the average industrial wage of €31,000, whose net monthly pay will be about €2,250.
Account holders who keep their balances permanently above €2,000 will be in line for a total annual interest payment of about €160 after Dirt.
Halifax is also throwing in a 0 per cent "switcher" overdraft of up to €1,500 for three months. Its regular overdraft rate of 9.5 per cent is the lowest on a free bank account.
Bank of Ireland, meanwhile, has signalled that it will announce an offer of credit interest in the next few weeks.
The current vogue for paying interest on current accounts was kick-started by the biggest bank in the Republic, AIB.
Last March, it introduced an interest rate of 4 per cent on balances up to €1,500, with AIB managing director Donal Forde describing the offer as "a shot across the bows" of the bank's rivals, that had previously been trying to tempt customers by offering free banking without conditions.
AIB quickly upped its offer to 11 per cent (for both new and existing customers) for a three-month period after Permanent TSB temporarily introduced a rate of 10 per cent for its new customers.
With a little gentle persuasion from Sopranos actor Frank Vincent, who stars in the bank's long-running advertising campaign, some 1,250 people a week are now opening accounts at Permanent TSB.
To put this in context, however, AIB opens 12,000-14,000 new accounts every month.
Permanent TSB's double-digit offer is now closed, while AIB's is due to expire on June 14th, although this is under review, according to the bank.
If AIB doesn't decide to repeat its 11 per cent promotion in the face of rival offers from Bank of Ireland and Halifax, it will revert to the 4 per cent rate on balances of up to €1,500. Permanent TSB currently has an identical offer in place.
As with the Halifax account, it is the condition at both banks that customers must lodge a minimum of €1,500 to their accounts each month.
This offer is worth €60 a year to a customer who always keeps their balance above €1,500.
In that context, Ulster Bank's cash offer of €150 to people who open an account at the bank looks like a good up front deal for switchers.
The bank has reported a 30 per cent jump in new current account openings following the introduction of a €150 cash incentive to open an account. The offer has been extended twice already and is now scheduled to expire at the end of May.
Naturally enough, the bank has imposed a condition to stop people taking the money and running back to their original bank, quids in. Customers must have their salaries electronically mandated to the account.
The sixth bank in the current account market is National Irish Bank (NIB), which boasts five different current accounts. Three of these offer free banking but no interest. Its Easy Plus account, which has an annual fee of €75, pays 1.5 per cent interest on balances, while the Prestige account, which costs €125 a year, pays 2.25 per cent.
Like Ulster Bank's €108-a-year U First current account package, these NIB accounts offer additional financial and lifestyle benefits, including preferential savings rates and access to airport lounges.
Unlike the Halifax, Permanent TSB and AIB offers, there is no upper limit on the interest NIB pays. About 1,400 people now switch bank accounts every month using the Irish Banking Federation (IBF) switching code, which is designed to make cancelling and rearranging direct debits and standing orders less painful and time-consuming for the consumer.
Under the IBF code, the old bank is responsible for transferring all direct debits and standing orders to the new bank. This process should be completed within seven working days, while the new bank must have the account up and running within 10 days of approving the application.
Many account switchers choose not to use the IBF code because they want to keep their old bank account open alongside their new one: if their new banking relationship doesn't quite work out the way they wanted it to, they can easily revert to the status quo.
Apart from financial incentives, the smaller banks have also been working hard to coax consumers away from the big banks on the grounds of better service.
Halifax is open on Saturdays, which is convenient for people who work nine to five, Monday to Friday, in the centre of vast industrial estates without as much as an ATM.
NIB, on the other hand, is embracing SMS. Customers have the option of signing up to text alerts that tell them what their balance is, when their salary has been lodged to their account or when they've gone overdrawn.
However the smaller players are fighting deep-seated inertia among consumers. Most people still open lifelong current accounts as teenagers, choosing their parents' bank or the one with the branch closest to their front door.
