Marks & Spencer stepped up competition in the banking sector today by launching its first "free" current account.
M&S Bank, which has 3.7 million customers, launched its first current accounts 18 months ago but these were "premium'" products which charged fees of £120 to £210 a year for a package of perks.
The new account comes with an automatic £500 overdraft, the first £100 of which is free. It will also offer loyalty points which customers can spend in Marks & Spencer stores, while those switching to the new account will receive a £100 M&S gift card.
The retailer's first bank branches were opened in 2012, offering seven days a week banking facilities which mirror opening hours in the stores and a pager service meaning customers can carry on with their shopping instead of queuing. M&S, which has rolled out around 30 bank branches so far, said the new account can be operated in branch, online or over the phone.
Tesco Bank has also set out its intention to launch into the current account market in the first half of this year, saying its deal will be designed with customers' needs in mind and will reward their loyalty.
The moves are part of a pattern which has seen new lenders come into the market in recent years to challenge major high street banks which saw their reputations dented by the financial crisis.