Free £185 if you open a current account - is it worth it?

M&S has new current account offer - is it any good?

M&S Bank has announced a new deal for its Current Account, which could leave you £185 better off. It sounds like money for nothing, but is the deal as good as it sounds?

SEE ALSO: Would you go cash-free? One in five Britons keen to ditch notes and coins

See also: Should you be paying for your current account?

See also: There is just a week left to spend or bank your old paper fivers

Bonus

M&S has introduced a new, more generous, switching bonus of a £125 M&S gift card. You'll get your card when you switch to the M&S account and have at least two direct debits coming out of it. In addition, you'll get £5 a month to spend in M&S for the first year that you hold the account - as long as you deposit at least £1,000 a month.

This is one of the most generous switching bonuses on the market - second only to the HSBC Advance Current Account which pays £150, plus another £50 after 12 months if you register for mobile or online banking within 60 days of opening your account. The HSBC account, however, requires you to deposit £1,750 each month

Of course the M&S vouchers for switching will be far more valuable to you if you are a regular M&S shopper.

Cashback

The M&S account also provides a debit card that offers extra loyalty points at M&S - so you get one point for every £1 you spend in the store. You then get £1 in M&S vouchers for very 100 points you earn - which works out as 1% cashback in M&S. You'll also get double Sparks points.

There's plenty of competition in the current account cashback market, so this is only likely to be a major draw if you are a dedicated M&S shopper. If you don't shop at M&S, you can change your shopping habits in order to cash in, but you need to ensure you aren't paying more for the items than you would elsewhere.

Alternatively, it's worth looking at the cashback available elsewhere. Nationwide's FlexDirect account, for example, offers cashback of up to 35% at selected retailers, while the Tesco Bank Current Account offers 2 points for every £1 spent at Tesco or Tesco fuel.

Other perks

Other perks include an automatic £500 overdraft, the first £100 of which is interest-free, and the rest charged at a rate of 15.9%. This is second only in the market to First Direct, which offers a free £250 overdraft.

Another bonus for customers is that you'll also get access to the high rate M&S Monthly Saver account, with a rate of 5%. You can save between £25 and £250 a month into this account, and could make another £81 in interest over the year. This again matches the First Direct offer - as well as the Nationwide FlexAccount, HSBC Advance and the Santander 123 offer, and is great for regular savers.

If your savings habits aren't quite so regular and reliable, however, you may be better off with the Nationwide FlexDirect Account, which offers 5% on any money in the current account - up to £2,500.

But perhaps the most sensible benefit, is the fact that rather than sticking to antiquated banking hours and a dwindling high street presence, your branch will be local and open for longer - including evenings and weekends. In addition, all M&S Bank branches offer a pager service so you can shop or wait in the M&S Café and you'll be alerted as soon as a member of the team is available.

It seems, therefore, that for regular M&S shoppers - and those who can get decent value out of switching some of their shopping to the chain - this is a great deal. It's also incredibly handy for those who want a good return on regular savings, a decent interest-free overdraft buffer and like to bank in a branch.

For those who don't tend to shop at M&S, however, there may be a more suitable combination on the market.

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10 things your bank doesn't want you to know
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10 things your bank doesn't want you to know
Once you have opened a current account with a bank or other lender, you will get a steady flow of emails, letters (and maybe phone calls) offering you a savings account, loan, mortgage, ISA etc to go with it. But while it may be tempting to have everything in one place, it's better to do the legwork and shop around for the best financial products. You can compare interest rates on loans and savings accounts in the 'best buy' tables in the newspapers, or look online on comparison sites. Remember you can still easily transfer your money between accounts, even if they are not with the same financial institution. 
Whether you want to apply for a new mortgage or refinance an existing one, your bank will probably be very happy to give you an instant quote in the hope that you will go with them. They may not tell you that you can shop around at other lenders. A mortgage broker can give you an overview of the best interest rates on offer, and might be able to cut you an even better deal him/herself. 

Want to cash in your jars of change that are sitting on your shelves at home? Many banks are not very keen on coins. They often only take it from their own customers. You will have to sort it into different denominations and put the coins in the bank's bags in set amounts (for example, £1 for coppers, £5 for silver, etc). Some banks only take a limited number of bags a day, or won't take any at busy times. Others take a different view: HSBC has free coin deposit machines in many larger branches where you pour your jar of coins into the machine and it counts them and automatically credits your account. Barclays, NatWest and RBS also have machines in large branches in city centres.

Bank employees now have a duty to point out that they only advise on the bank's products and don't offer independent financial advice. What they won't tell you is that even the advice they give you about the bank's own products should be treated cautiously. Bank staff are often undertrained, underpaid and overworked. (You could ask for the employee's qualifications before getting advice.) So do your own research and/or find an independent financial adviser.

Nothing is set in stone. Your bank won't tell you this, but sometimes it will waive a fee, for example an overdraft or an ATM fee, depending on the circumstances. You have nothing to lose by asking, if you can argue persuasively why they should waive the fee. Citizens Advice says your bank should treat you sympathetically if you can show financial hardship.

As stated in the previous slide, some things are negotiable – such as interest rates or waiving fees – if you can make a good case for it. In that instance, talking to an employee in person is better than filling in a form online.

If your account is overdrawn and you get paid, your bank could use this money to pay off your overdraft without your permission. However, you have a right to ask them not to do this so you can pay your rent or mortgage first. This is called first right of appropriation. You have to ask your bank in writing, and you'll need to write to them with new instructions every time money gets paid into your account. Make sure you write 'first right of appropriation' in your letter.

If money is mistakenly credited to your account, your bank or building society can recover the money, assuming they do this within a reasonable time. But you may be allowed to keep the money, for example if you didn't realise the bank had made a mistake and spent the money in good faith. You would have to prove that you spent it in such a way that it would be unfair to ask you to pay it back. You can complain to the Financial Ombudsman if you think your lender is being unfair in asking you to repay the money.


If you do have to pay it back, you could try to reach an agreement with your bank to pay it back in instalments without interest being added.

The Financial Ombudsman Service has more advice on what happens when payments have been credited to the wrong account. If you did something wrong - for example, by entering the wrong account number - rather than the bank, the Financial Ombudsman may still uphold your complaint. They consider whether the financial institution made it clear to the consumer that only the bank sort code and account number are used to process the payment, rather than the name of the payee. They will also ask whether the lender should have realised that the consumer had made mistake, and once the problem came to light, did the firm take reasonable steps to try to get the money back from the recipient.

If too much is deducted from your account, your lender may have to refund the full amount of the payment. For example, if the money is taken through a direct debit or credit card payment for a hotel room or car rental. When deciding whether the debit was reasonable, the bank or building society will take into account your previous spending pattern. But the bank doesn't have to refund the payment if you agreed the amount beforehand or were informed of the payment by your lender at least four weeks before.

If you don't have enough money in your account to cover a direct debit payment, your bank may not make the payment. It doesn't have to tell you that the payment hasn't been made, so the onus is on you to keep checking your account. If, on the other hand, the payment goes through, you may be charged for an unauthorised overdraft.

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