Belfast Telegraph

Danske offering cashback account in bid to compete with bigger rivals as thousands move from NI banks

By John Mulgrew

Danske Bank has become the first of the big four banks here to launch a cashback account to compete with bigger rivals such as Santander and Halifax.

The launch of the new product comes as thousands continue to move their current accounts away from Northern Ireland's main banks, to big rivals, which offer cash incentives.

Customers will now have the chance to receive a payment of £7 each month if they take on the Danske Bank account.

But they are also charged £2 a month for the account, and also must pay in a minimum of £1,200 a month into it.

And they will also have to log in and use internet banking at least once a month.

It says it offers an interest-free overdraft of £100 to customers.

In the first nine months of last year, almost 10,000 customers of Ulster Bank, First Trust (AIB), Danske Bank and Bank of Ireland moved their accounts elsewhere.

And the announcement comes amid massive changes to the banking sector in the UK, which could see caps to monthly overdraft charges and a price-comparison type website set up to allow customers to more easily move between banks.

Danske is competing with the popular Santander 123 account which, for a £5 a month fee, offers perks such as cashback on bills and interest on balances, and accounts from Halifax - which also offers a £100 switching bonus - which pay customers £5 each month.

Tony Wilcox, managing director of personal banking at Danske Bank, said the new account "will provide our customers with the additional choice and value that many of them have told us they would like to see".

John French, chief executive of the Consumer Council, said it "continues to encourage all consumers in Northern Ireland to shop around for a bank account that is right for their needs and provides them with the best overall deal".

The announcement comes as the competition watchdog says banks should cap customers' monthly unarranged overdraft costs and sweep away "complicated and opaque" charges.

Overdraft charges have been criticised by consumer campaigners, who say some customers can end up paying more than they would for a payday loan.

The Competition and Markets Authority (CMA), which put forward the proposals, found a wide range of unarranged overdraft fees, with some charging a daily fee of £5 to £10, some charging monthly fees and some also charging interest.

In 2014, £1.2bn of banks' revenues came from unarranged overdrafts - which have been described by commentators as a "cash cow" for banks.

According to financial information website Moneyfacts, the average monthly usage fee for an unauthorised overdraft has increased from £43.88 two years ago to £55.69 today.

Under the proposals, banks would set a monthly unauthorised overdraft charge cap, which they would have to show clearly. It is hoped that this would encourage banks to compete to drive down the costs, rather than having a single charge cap.

Belfast Telegraph