As Barclays Bank turns up current account heat with launch this week of a new, features-laden current account, online financial data analysis company Moneynet ( http://www.moneynet.co.uk ) warns consumers to look before they switch.
"On face of it, new current account offering from Barclays looks attractive,” said Moneynet Chief Executive Richard Brown.
“The bank has admitted it wants to poach customers from its competitors by rolling out a range of benefits that it claims are worth around £1,000 a year if you take advantage of them – but we feel borrowers should be very cautious when considering switching current accounts.
“Despite what lenders say, it is nothing like as straightforward as hopping from one credit card to another, and there is a real danger that account holders can jeopardise their all- important credit rating, as one of key questions asked by lenders as part of their credit scoring process is “how long have you held your current account?” – a short period of time with your bank could results in a reduced credit scoring.
"And there are one or two other issues with Barclays offering: interest free overdraft facility and interest free Barclaycard for ten months will probably appeal to people who want interest free borrowing. But with UK consumers now in red to tune of around £1 trillion pounds, we feel concerned that lenders are inviting account holders to rack up yet more debt.
"If you do borrow money via this account, sensible option is to clear debt within 10 months’ time frame. And borrowers should also bear in mind that there are many products on market offering interest free credit deals for at least same period as Barclaycard proposition,” said Brown.
“We are likely to see a lot more accounts with bells and whistles such as this new offering from Barclays - current account market is worth billions to banks and is intensely competitive.