Roll back the clocks! In a move reminiscent of the good ole days when banks were actually competing for our business, Permanent TSB is planning to launch a brand new fee-free current account next week.
The new current account will be available for signup on Tuesday 2nd April. They haven’t made any formal announcements yet, but some of the details are out there already – so we checked in with Permo and got the full skinny.
The new account is pretty simple and it has just one main requirement. Customers must lodge €1,500 per month to avoid fees in that month. The €1,500 does not have to be lodged in one lump sum, so this account will work for people who are paid monthly, bi-monthly, or weekly. It may also suit freelancers and people who are not paid regularly.
The best bit is that customers do not need to maintain a balance of €1,500. In fact there is no minimum balance requirement. Customers can lodge their €1,500 and run the balance down to zero on the same day and they will still meet the fee-free requirement for that month. There are no transaction requirements either – so customers don’t need to use their debit cards a certain amount of times or do online transactions every month.
Another good bit is that this account will available to existing Permanent TSB customers. Permo will not automatically switch existing customers over though. They must sign up for the new account.
Basically, Permo is after paycheques here. And they are hoping to attract those paycheques away from AIB and Bank of Ireland. It’s a tall order, but they say they are undeterred by traditionally low current account switching rates in Ireland. They are optimistic enough in fact, that they have hired a dedicated team to help customers with their switching queries, and even say that they can do most of the work over the phone.
The idea of changing current accounts can strike mortal fear into the typical Irish banking customer though. Concerns about salaries being paid, and whether standing orders will be made top the list of worries.
The thing is that switching current accounts is not actually that hard. The Central Bank has a switching code that the banks have to obey. It says that your old bank has got to help you switch and they have to share details of your direct debits, standing orders and so on with your new bank to make sure you don’t miss any payments. The whole process is supposed to be completed in just seven days.
I’m sure Permanent TSB (who have been keeping quiet about it until now) will be heavily promoting the switching code in the coming weeks. They may not have to try all that hard though, because people are sick of current account fees and the almost impossible requirements set by the banks to avoid them.
Right now AIB customers must maintain a balance of €2,500 at all times to avoid fees. Drop below that in any quarter and all fees apply. Bank of Ireland requires customers to maintain a balance of €3,000 at all times. And up until now Permanent TSB customers had to lodge at least €3,000 per month, use their Visa debit card 18 times, and make an online transaction.
Of course, these requirements have led to nearly everyone paying fees and a total windfall for the banks. An AIB customer, for example, who used to have free banking, can now expect to pay €100 in fees per year for making just one transaction per day.
Permanent TSB will not be alone in offering an account where it is easy to avoid fees though. Ulster Bank actually has a properly fee-free current account, but they have not seen a stampede of disgruntled customers beating a track to their doors to sign up. Could be that their difficulties last summer scared the punters away.
In fact, switching numbers are so low that only 0.16% of current accounts were switched at last count in 2011. There’s good money to be saved in switching though, so it’ll be interesting to see whether Permanent TSB can help us overcome our inertia and fear this year.