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Tuesday 06th of October 2009
June 1, 2009    

Moneysupermarket reveals dark side of high interest accounts

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by David Masters
Moneysupermarket reveals dark side of high interest accounts

Moneysupermarket.com has warned of a dark shadow lurking behind the high interest rates offered by current accounts with a minimum funding clause.

Attractive interest rates and 0% overdrafts are drawing consumers to these accounts, the price comparison website said, but many are unaware that they need to pay a minimum amount each month into the account.

Customers opening the accounts are blinded by high interest rates, moneysupermarket.com said, and are unaware that they could be charged fees or have their account closed if they fail to make the minimum monthly deposit.

Benefits of the accounts – which require customers to pay in minimum funds of between £500 and £1,500 a month – can include an interest free overdraft, and an attractive interest rate.

However, “there is no such thing as a free lunch,” moneysupermarket.com warned.

“Minimum funding requirements should not pose too much of a problem for those in regular employment and earning a fixed salary,” said Kevin Mountford, head of banking at the price comparison site.

“But anyone not drawing a regular wage, or facing a pay cut or a reduction in overtime, should think twice about these deals.”

He added: “The penalties for not paying enough money into your current account can be harsh, some banks may even close the account entirely.”

Customers opening accounts with a minimum funding clause should think through whether there’s a reasonable chance that they’ll fail to fund the account as required, Mountford concluded.

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