/ Money

Do you keep all your financial eggs in one basket?

Golden eggs in a basket

I have my savings, current account, cash Isa and credit card with a single financial provider – a Which? recommended provider, naturally. But are we missing out on better deals by sticking our eggs in one basket?

Working at Which? Money, I have an impressive egg collection – metaphorical, financial eggs, that is.

But I keep them together in one big basket, with my current account, cash Isa, credit card and savings account all with the same financial provider.

Possibly enough to get me fired from Which? in normal circumstances, but my bank is a Which? Recommended Provider in each category, so I should get away with it. The products are competitive too.

And yet, a new entrant to our Best Rate savings tables this week made me wonder how many people have all their products with one provider out of habit or brand loyalty, even when they know they’re not suitable or competitive?

Egg-citing new deals…

Vanquis Bank now offers one- and two-year fixed-term savings deals that feature in our Best Rate tables, paying 3.2% and 3.85% respectively. The bank is authorised by the Financial Services Authority (FSA) and fully covered by the UK Financial Services Compensation Scheme (FSCS) in case anything goes wrong. No problems there then.

At the opposite end of the scale, Vanquis’ other main product is a credit card aimed at people with a poor credit history that charges an APR of 39.9%. The card is therefore unsuitable for most consumers.

There’s nothing wrong with a bank offering high-cost credit at the same time as competitive savings accounts, but something is going wrong if you’ve got both. If you do, it’s probably time to use your savings to pay off your debt.

Enough to make you switch?

This may be an extreme example, but what about the thousands of consumers who stick with the same bank’s mediocre products just because they’ve banked there for years? I’m happy to keep all my eggs in one basket if I like the provider and it offers competitive products, but I’d be off like a shot if either factor changed.

What would make you switch? And conversely, are there any banks you’d be happy to borrow from, but reluctant to save with (or vice versa)?

If I told you that Vanquis is owned by doorstep lender Provident Financial would that change your view? My brain tells me it doesn’t matter, my heart is undecided.

Comments
Profile photo of rarrar
Member

A few years ago moving savings around was a pain – sending ID everytime you opened an account with a new financial institution; but now ID seems to get validated “electronically”, or at least is is for me, and moving savings to get a better rate is far far easier.

The only hassle is the daily transfer limit many banks impose when trying to move money – “for security” purposes.

Profile photo of Hannah Jolliffe
Member

I put my hands up to this one. I have about four accounts with Smile, two of which are badly-performing savings accounts which I really should swap for a better interest rate elsewhere. Why haven’t I? 1) Laziness. 2) I like banking with an ethical bank and like what Smile stands for. 3) Their customer service is good. 4) Convenience – swapping money between accounts is easy, for example. Is this all enough reason to stay with them?

Profile photo of Nikki Whiteman
Member

I have two different current accounts, three savings accounts (that are reasonably pointless because there’s nothing in them) and a few different credit cards – all with different providers.

Some of these I should just close down, but some are really useful. My favourite new discovery is that if you have a current account with Natwest and just stop using it, they get lonely and sad and send you things as an incentive to move back to them. e.g. I didn’t have any wages paid into the account for a while (over a year) and instead had them paid into my other current account. Eventually I got a letter through the post from Natwest saying if I got my wages paid in they’d give me £100 Amazon vouchers – result! I paid wages into that account, then just transferred it all out into the other one (where my mortgage, bills, etc are paid from). I now have enough books to see me through the next few months!

I recently got another letter from them saying they’ll give me £20 if I set up a few direct debits. They are literally paying me to bank with them. Am hoping that if I gradually switch my current account activity back to them, my other current account provider will start trying to lure me back =)

Member

In terms of savings, I have almost always banked with the market leader at the time. I am passive most of the year, then come April, I try to do a thorough annual review on all my accounts to decide what needs consolidating, transferring or closing down. When it comes to credit however, it is usually my current account provider who benefits – mainly because of the convenience. I think Hannah has hit the nail on the head: the way in which we bank is rarely a simple objective process of choosing the best provider based purely on competitive interest rates! Rather, we may have a mix of goals/priorities: different attitudes to money-saving, ethical considerations, concern over service standards & of course, convenience! Naturally, it’s sensible to try to keep track of rates all year round, but that can be an exhausting business, and not particularly rewarding if you only have a small pot of savings/investments to play with anyhow – the difference between the interest paid on the best buy tables & your current provider may be too small to justify the hassle of constantly moving your money around! Better to spend that time doing something you love!

Member
Mikhail says:
22 September 2011

I’d like to keep all eggs in one basket, but I can’t see ANY benefits doing so. I like my current account with first direct, but their credit cards, even the gold one, have a very high APR and extremely expensive to use abroad (2.99%) so I have Halifax Clarity and Santander (as a backup); but withdrawing cash from the cards or first direct account abroad is very expensive; Smile bank, e.g., takes 4.75% for cash withdrawals abroad, so I also have Metro Bank current account, but when I’m home, I want some benefits from my spending so I have American Express cashback card. ISA obviously also travels from bank to bank, because after, e.g., the bonus year the interest rate goes to 0.something. That’s my story.

Profile photo of richard
Member

I have kept all my usual accounts in one Bank for convenience – But if the FSA proposal to stop “free accounts” so Banks can make more money goes ahead – I will be removing all my accounts off shore – and demand a decent interest rate.