High Street Banks: No Longer the Cheapest Borrowing Option?

| November 16, 2013


Historically, if you wanted a loan, mortgage, savings account or credit card your first port of call would be your bank. This was mainly due to the fact that banks would offer the best rates, and because you already have a relationship with them this would generally pay in your favour.

However, since the ‘credit crunch’ and subsequent collapse of a major banking institution, other banks have been forced to make changes to the way in which they operate and indeed reassess who they lend their money too. Throughout this article we are going to discuss the various ways in which you can beat the banks and get yourself a better deal.

1. Loans

While banks have been wrapped up regarding their lending criteria, it seems that many supermarkets, building societies, mainstream and peer to peer lenders have spotted a gap in the market. If you’re on the lookout for a medium sized personal loan you’ll probably find that the cheapest rates are offered by Hitachi Personal Finance, Derbyshire Building Society, Zopa (a peer-to-peer lender) and Tesco or Sainsbury’s bank – all offering there loans at less than 5% APR. Meanwhile large banks such as NatWest, Nationwide and RBS are all offering their loan products at over 6%.

2. Credit Cards


The battle for the best balance transfer credit card is well and truly on, whilst Barclaycard are working hard to keep the market-leading spot, they are under extreme pressure from the likes of Virgin, Tesco and Sainsbury’s. While the supermarkets may not offer the longest interest free period, they do offer loyalty points in return for card transactions; which is great for those looking to get the most out of their weekly shop or indeed reduce the cost of the expensive Christmas shop.

3. Savings Accounts

Savings rates in general are pretty unattractive at the moment with very few lenders offering rates in excess of 2.5%; even on their long-term fixed rate bonds. The thing is, in these tough economic times we’re currently experiencing many are looking to build emergency funds as opposed to long term savings which means they need instant access to their money in times of needs. The rates attached to instant access accounts are even less attractive than fixed rate bonds and with banks piling all of their eggs into their medium term personal loans basket; they’re simply not interested in offering the best savings accounts. With this in mind, the best rates are currently being offered by the Investec (1.55%), Post Office (1.5%) and Sainsbury’s Bank (1.45%), with the likes of Halifax, Barclays and NatWest barely breaking the 1%interest mark.


While the banks may still be carrying their reputation as the cheapest credit providers, this isn’t always the case anymore. This is why it is important that you compare all the possible options prior to jumping into any applications. Comparison websites are arguably the best way of finding the most suitable options based on your financial needs.

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Category: Banking, Loans

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