first direct provides new format for its current account

first direct is changing the format of its current account and savings products in order to help customers earn good money on their savings.

first direct has carried out extensive customer research and established that customers really want a better deal on savings and overdrafts. Customers will also receive free ‘red alerts’ by text message to prevent them going overdrawn.

At present, first direct has 2 current accounts, the Cheque account and Bank account, which pay 0.10% and 2.00% AER respectively. From 1 November, first direct will merge these accounts into the 1st Account.

The new account will not pay credit interest but instead the bank will provide a better deal for savers, a new instant access savings account, called Everyday e-Saver, paying 5.5% AER. Furthermore, customers can set up an automatic monthly sweep to move money from their 1st Account to their Everyday e-Saver, to make the most of the amount they earn from their savings. Finally, there will be a new Regular Savings account paying 8.00% AER fixed for 12 months. Customers can save between £25 and £300 each month – this is £50 a month and £600 a year more than most other providers allow.

As a result of the changes, first direct is offering a better deal on overdrafts, i.e. the first £250 of overdraft will be interest-free. The bank is offering free text message banking (currently charged at £30 a year). Customers will receive personal text alerts to warn them when they’re close to going overdrawn. The free text alerts can also be set up for other items such as when a balance reaches a certain amount.

According to first direct, the average customer who takes no action will be better off by £1.20 a year whereas the average customer who transfers their savings from first direct’s existing instant access accounts to the new online Everyday e-Saver account will be better off by a further £34.80 a year.

A spokesperson for first direct commented that 96% of customers informed them that credit interest wasn’t relevant when choosing to bank with first direct. Furthermore, nearly 70% were unaware of the rate of interest on their current account.

As an incentive to join first direct, any new customer opening a 1st Account from 1 November not entirely happy after 6 months can claim £100. first direct’s easyswitch team will help them transfer to another provider.

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