News Column

A new challenge for M&S in the high street ... taking on the banks

May 17, 2014

Marks & Spencer hopes to challenge the dominance of the main high street banks with its first free-to-use current account. M&S Bank said it was bringing its "trusted Marks & Spencer brand values" to deliver more choice.

It is giving pounds 100 in the form of an M&S gift card to those who switch. Unlike some rival offerings, the new account - which has no monthly fee - does not pay interest on credit balances.

Customers can bank online and over the phone via a UK-based call centre, as well as at many stores.

The account comes with an automatic pounds 500 overdraft, the first pounds 100 of which is interest-free. For overdrafts above pounds 100, the interest rate is 15.9% EAR, and there are no overdraft fees.

The annual cost of going overdrawn to the tune of pounds 600, seven days per month, would be pounds 18 compared to an average of pounds 56 across the market.

M&S Bank does not charge a transaction fee for overseas ATM cash withdrawals made with the M&S debit card, although a foreign exchange charge of 2.75% is applied.

Account holders can earn loyalty points on their debit card spending: they earn one for every pounds 1 spent in-store and online. For every 100 points, customers receive pounds 1 in M&S vouchers.

Jafar Hassan, a personal finance expert at the website, said: "Whether it will be a credible threat to high street banks remains to be seen, but it certainly has the potential to shake up the retail banking industry."

This isn't M&S's first foray into banking. In September 2012 it launched two "premium" current accounts, both with a monthly fee and aimed at regular M&S shoppers.

The new account is available now.

Rupert Jones

For more stories on investments and markets, please see HispanicBusiness' Finance Channel

Source: Guardian (UK)

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