The rise of UK challenger banks – Better service for simple banking - Business MattersBusiness Matters

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• The rise of UK challenger banks – Better service for simple banking - Business MattersBusiness Matters
• Best free checking accounts in January 2020 - Bankrate.com
• Lloyds, Halifax and Bank of Scotland to charge up to 49.9% overdraft fees - Yahoo Sports

The rise of UK challenger banks – Better service for simple banking - Business MattersBusiness Matters Posted: 23 Jan 2020 01:52 AM PST Banks have been making easy money from their customers for a long time. Now there are challenger banks in the UK that offer their clients solid banking services with no-frills pricing. There are a few great challenger banks in the UK, and you might want to consider using one for your daily banking needs. Most of these challenger banks were launched in the wake of 2008's wild crisis, and in some ways, they have been helped by the public's growing distrust of the established banking players. Now that it looks like Negative Interest Rate Policies (NIRP) are here to stay, and established banks have less to offer their clients than ever before. In addition to offering some of the most basic banking services that people need every day, challenger banks have worked to create options for their clients that are next to impossible to find with normal retail banking accounts. Some challenger banks offer multi-currency accounts, as well as low priced international transfers. Challenger Banks are Growing It is estimated that challenger banks in the West currently have around 20 million customers and that number is expected to grow exponentially in the next five years. The Big Three Challenger Banks, including Revolut, N26, and Monzo, are on the verge of rolling out their international expansion plans into the US and other markets. All three currently have operations in the UK Revolut, N26, and Monzo had a combined customer base of about 13 million customers in Q3 of 2019. Also, UK-based Starling had 1 million customers by the end of 2019. Europe is leading the charge in this industry, both from a growth and mindshare perspective. The founder of Revolut told Sifted at a recent conference organized by Unbound London: "We are three/four years more advanced compared to US companies in terms of product, in terms of regulation, in terms of size. US companies should learn from Europe." All the Big Three Challenger Banks are expanding into the North American market in the coming years. If their success in the UK and Europe is any guide, these companies are primed to make a killing in the coming years. As PiDatametrics reported, "Challenger banks have grown in search by 32% between Jan 2016 – Jan 2019, whereas traditional banks have seen a 22% decline in the same time. Revolut the most searched challenger bank between 2016 – 2018" Challenger Banks that Might Work for You N26 and Revolut are probably the two best known financial technology or 'fintech' players in the UK market right now. They have no high-street presence and operate entirely online with customers accessing their accounts via intuitive, user-friendly apps on their smartphones. Here is some background information on popular challenger banks: Revolut Revolut was launched in 2015 by Nikolay Storonsky and Vlad Yatsenko, who is the son of a Gazprom executive. It has grown into a formidable business that offers its customers great banking solutions. The UK-based firm has a more limited license than some rivals, operating under a specialized bank license via Lithuania, not as a full bank. That means Revolut can offer a current account for deposits and basic debit cards, but it also has some limits on the types of investment it can offer. Revolut is a digital-only banking app and a card with a focus on technology, low fees, and flexibility. It is especially aimed at those who travel a lot, offering spending abroad and international money transfers with no hidden fees. Revolut has more than 8 million customers, and according to Revolut, it has completed more than 350 million transactions with a total value of over £40 billion. Revolut offers a UK current account, a Euro IBAN account, and a debit card when customers open a standard free account. It provides usual banking services and allows its clients to withdraw money from ATMs in many nations. Clients also get low-cost international money transfers, fee-free global spending, and access to a cryptocurrency derivatives exchange. Revolut has been expanding into new markets. Besides its home market in the U.K, Revolut is available across Europe. In 2019, the company expanded to Singapore and Australia. It currently has at least 8 million users, according to company data. In September 2018, Revolut announced in September 2018 that it would launch in New Zealand, Hong Kong, and Japan, it also announced that should launch in the U.S. and Canada by the end of last year. In February 2019, there was negative publicity surrounding an alleged toxic work culture at the company, which was reported by Wired magazine. There have also been some concerns about possible connections between the firm and the Kremlin, though there as been no firm evidence presented to confirm any sort of malfeasance. N26 Established five years ago in Berlin, N26 is a fully licensed German bank, which can be used by anyone in the UK, Europe, and the United States. N26 has more than three and a half million customers in over 27 countries. N26 has a UK banking license and provides customers with a UK account number and sort code, which facilitates direct deposits and payments. The company operates in Ireland and other EU countries on a European Banking Passport N26 customers are covered by the German Deposit Guarantee Scheme up to €100,000 so your money is as safe with this bank as with any of the traditional Irish ones. Like most challenger banks, N26 provides services that connect directly to a smartphone. It offers many of the most common banking services that people need. One of the reasons why banks like N26 are attractive is because of its low cost of doing business. N26 does not have physical bank branches, which helps keep its costs lower than what a high-street bank could offer. Last January, the Berlin-based startup announced a $300 million USD funding round and raised another $170 million USD last July. The company is now valued at $3.5 billion. N26 has launched several tiered accounts, including N26 You, Metal, and Business You. N26 You is a premium bank account that comes with travel insurance, N26 Metal offers a stainless steel debit card, and N26 Business You is a free bank account for freelancers that comes with 0.1% cashback on all purchases and free international spending. Ways to Take Advantage of Neobanks If we take a look at the costs that are attached to using a challenger bank, it is easy to see that they are aiming their services at retail banking customers that don't need much more than a payroll account that lets them spend their money on regular things like food and rent. These banks may make sense as a spending account that is funded by an existing account at a traditional bank, as they are a great way to insulate your primary accounts from hacking or other kinds of fraud. There are also options for people that don't live a traditional lifestyle and travel a lot. You will still need to have a residence to qualify for these banks, but you may be able to use a friend, or family member to establish these legal requirements. Overall, challenger banks are giving retail banking customers lots of new options, and are probably a better choice if you are comfortable dealing with a bank via an app, and not having the option to visit a physical bank branch.

Best free checking accounts in January 2020 - Bankrate.com Posted: 06 Jan 2020 12:00 AM PST Hill Street Studios/Getty Images They say nothing in life is free. But when it comes to banking, you shouldn't settle for anything less than a free checking account. The best checking accounts are not only free, but may also offer you perks such as a high annual percentage yield (APY), out-of-network ATM reimbursement or free official bank checks. Checking fees to be aware of Many free accounts can end up costing you fees if you don't fulfill the requirements set by the bank on the account. Make sure you know what these rules are before opening an account. Some fees to be on the lookout for Maintenance fee: You'll usually get charged this fee if you go below a certain balance in a monthly statement period. Overdraft fee: Transactions that cause a negative balance can lead to this fee. Sustained overdraft fee: This fee is charged after a certain amount of time if your account remains negative. ATM fees: Know what it will cost you to access your money from an out-of-network ATM. Some banks will reimburse some or all of these fees. According to Bankrate's 2019 checking account and ATM fee study, using an out-of-network ATM costs an average of $4.72. A customer's bank charges an average of $1.63 and then ATM surcharges from the ATM cost customers an average of $3.09. Paper statement fees: Receiving paper statements in the mail will cost you at a lot of banks. Compare: Best free checking accounts in January 2020 Ally Bank: Interest Checking Account Ally Bank offers a checking account that doesn't have a monthly maintenance fee or a minimum opening deposit. It also offers a little interest, 0.1 percent APY on balances less than $15,000 and 0.5 percent APY on minimum daily balances with a minimum daily balance of $15,000. The interest checking account also offers freebies, such as free standard checks and access to free Allpoint ATMs. Minimum deposit and balance requirements: $0 Yield: up to 0.5 percent APY ($15,000 minimum daily balance required for this APY.) Rewards and incentives: Free standard checks, cashier's checks, incoming wire transfers without a fee and free access to Allpoint ATMs. Overdraft options: There's a $25 fee for an overdraft item paid or returned. You only get a maximum of one fee per day. Fees to be aware of: Cross border/currency conversion fee of up to one percent of the transaction price. Capital One: 360 Checking Account This checking account earns a little bit of interest on all balances and doesn't require money to open or maintain this account. It also gives you fee-free access to more than 39,000 Capital One or Allpoint ATMs. You can open a 360 checking account either online or at a Capital One location, so you can choose whichever account-opening process you prefer. Minimum deposit and balance requirements: $0 Yield: 0.2 percent APY Rewards and incentives: Your first checkbook order is free. Overdraft options: You can auto-decline overdrafts, you can add funds to the account to cover the overdraft with next-day grace, you can apply for an overdraft line of credit or free savings overdraft protection is an option. Fees to be aware of: Additional orders of 50 checks are $5. Discover Bank: Cashback Debit Account This checking account gives you both an account with no monthly maintenance fee and a cash-back option. You earn one percent cash back on up to $3,000 in debit card purchases each month with this checking account. This account will also let you get free standard and official bank checks. Minimum deposit and balance requirements: $0 Yield: None Rewards and incentives: One percent cash back on up to $3,000 debit card transactions per month, free standard checks, official bank checks, no stop payment fees and free withdrawals at more than 60,000 in-network ATMs. Overdraft options: Overdraft protection links your checking, money market account or savings account at Discover Bank. It doesn't cover ATM transactions, debit card transactions or transfers at Discover Bank. Fees to be aware of: Discover Bank doesn't reimburse out-of-network fees charged by other banks. nbkc bank: Personal Account nbkc bank is an online bank that also has four locations in the Kansas City area. The nbkc personal account offers you a competitive APY for a free checking account. It only takes $5 to open this account. The personal account also reimburses up to $12 worth of ATM fees incurred by using ATMs that aren't in the nbkc or MoneyPass network. Minimum deposit and balance requirements: $5 to open and no minimum balance. Yield: 1 percent APY Rewards and incentives: Free starter book of checks, more than 32,000 MoneyPass ATMs in the U.S. and Puerto Rico won't charge you a fee and nbkc bank reimburses up to $12 of out-of-network ATM fees charged by using other ATMs. Overdraft options: No fee for overdrafts or for not having sufficient funds in your account. Fees to be aware of: It costs $5 to send a domestic wire transfer and $45 to send an international wire transfer. Simple: Simple Individual Checking Simple accounts have their money held at BBVA USA, Simple's partner bank. When you sign up for Simple, every customer receives a Simple individual checking account. Once you have that account, you're eligible to open a protected goals account. That account is where you can earn up to 1.9 percent APY, which is competitive with some high-yield savings accounts. Minimum deposit and balance requirements: $0 Yield: 0.01 percent APY. (Once you have a Simple Individual Checking Account. You can apply for the Protected Goals Account to earn up to 1.9 percent APY on balances $10,000 and above and 1.75 percent APY on balances under $10,000. Rewards and incentives: Competitive APY with the Protected Goals Account, no stop payment fees and no charge for incoming wire transfers. Overdraft options: No fee charged for both overdrafts and for having insufficient funds. Fees to be aware of: Visa charges a one percent international service fee on international transactions. This includes non-U.S. ATM withdrawals and purchases. Simple doesn't reimburse out-of-network ATM fees and it charges $5 for a personalized order of 25 checks. TAB Bank: TAB Bank Kasasa Cash Rewards Checking Account TAB Bank is a commercial bank that was founded in 1998. It is located in Ogden, Utah. It offers a very high APY on its Kasasa Cash Rewards account. But unlike a typical high-yield savings account, you're going to need to meet certain requirements to get this high APY. This includes having at least one direct deposit, ACH transaction or bill pay transaction and you need to make at least 15 debit card transactions of at least $5. Minimum deposit and balance requirements: $0 Yield: Up to 4 percent APY on balances up to $50,000. Rewards and incentives: Up to $15 reimbursed monthly on ATM withdrawal fees if you meet the rewards requirements. These include at least one qualifying direct deposit, at least a combined total of 15 debit card transactions that are each at least $5. Overdraft options: No fee for overdrafts. Fees to be aware of: If you don't meet the reward requirements you won't be reimbursed for fees incurred using other ATMs. [COMPARE: Best checking accounts] Is there a catch to a free checking account? Usually there's a way to make your bank account free. A lot of banks charge maintenance fees, but these fees can often be waived if you meet certain criteria, such as maintaining a minimum balance above a set level or having a direct deposit of a certain amount. An account that requires a high minimum balance means you're keeping money in an account just to avoid a maintenance fee. The larger the amount of money, the more of a problem this is. For instance, if you have debt this money would be better used toward that. Or if the account isn't earning a competitive APY, a high-yielding account may be a better option — so that your money keeps growing. Getting a competitive yield There are free checking accounts that will offer you a competitive APY without costing you in fees. But you'll likely have to have a direct deposit or make a certain number of debit card purchases to qualify for this high APY. At some banks, you might have to meet both of these requirements. Unlike most savings accounts and money market accounts at online banks, this high APY might be capped if your balance goes beyond a certain amount. Once it surpasses a certain threshold, that additional money can earn less than the top-yielding savings accounts and money market accounts. Minimum deposit and balance requirements Accounts usually have a minimum amount required for opening and a minimum balance that you need to stay above in order to avoid a maintenance fee. Approximately 42 percent of checking accounts that don't earn interest are considered free, according to Bankrate's 2019 checking account and ATM fee study. A checking account is considered free if it doesn't charge monthly maintenance fees or require a minimum balance. Some banks may have a checking account that will waive this fee if you have your direct deposit going into this account. The average minimum balance needed to open a non-interest checking account is $162.94, according to that same Bankrate study. If you want an interest-bearing checking account, that may require an even higher minimum balance. The average minimum balance requirement on those accounts is $7,123 according Bankrate's 2019 study. Look for an account that either doesn't have a maintenance fee or one with a minimum balance requirement that you can always stay above. Rewards and incentives Some free checking accounts will give you a higher APY if you have a direct deposit or make a certain number of purchases with a debit card. These checking accounts should be considered if you can meet the requirements. Banks also may offer reimbursement on out-of-network ATM fees, free official checks or a free order of standard checks on an account that is free as long as you meet its direct deposit or balance conditions. If you've had your checking account for years, that's normal. The average U.S. adult has had the same primary checking account for around 16 years, according to a survey conducted for Bankrate and Money in 2017. But banking has changed a lot in the past 16 years. For instance, some checking accounts offer cash bonuses for opening a new account. It's always good to compare checking accounts to see if there's a better one for you. This is especially true if your checking account is charging you fees. Overdraft options See if your bank has an option to enroll in debit card overdraft protection. If you're going to enroll in this, ask how much the fee will be if a transaction is paid that takes your account negative. Bankrate's 2019 checking account and ATM fee study found the average overdraft fee is $33.36. Here are the overdraft options at Capital One, for example: Auto-decline: Transactions that take your account balance negative will generally be declined by the bank. Savings overdraft protection: A linked savings account or money market account can fund a transaction that would otherwise take your checking balance negative. So you'll need to have at least two bank accounts, a savings deposit account and a checking account, in order for the checking to pull from savings to cover an overdraft. This type of overdraft may be less costly than standard overdraft charges. Overdraft line of credit: A line of credit that backs up your checking account. This will generally have an annual percentage rate (APR) that will charge interest on balances. Opportunity to make your account positive: You may have some time, at Capital One its a full business day, to fund your account with the amount you're overdrawn to avoid an overdraft fee. Pros and cons of free checking Before opening a free checking account, weigh the pros and cons to see if it's the right product for you. The pros of opening a free checking account include: There are many options that have low minimum balance requirements. Some might not even have any minimum balance required to open and maintain the account. With some accounts, you may be able to use any ATM convenient to you for free. Paying fees on a checking account should be avoidable. Instead of paying these fees to a bank, this money can be used to pay bills or fund an emergency fund. Some free checking accounts may offer you more perks and benefits, such as free checks, cash back on debit card purchases or a high APY. The cons of opening a free checking account include: If you need to make a certain number of debit card purchases in order to meet the account requirements to get a higher APY, you might be better off with a cash back or rewards credit card. Compare these options to see which is better for you. Many checking accounts are free, as long as you maintain a certain balance. But some accounts might have very high minimum balances. Having a lot of money in a checking account that isn't earning a high APY, just to avoid a maintenance fee and for some perks, might not be worth as much as having your money in a high-yield account. Potential fees to try and avoid If you're getting charged fees, you need to reevaluate your accounts to avoid paying these. Here are a few of the most common ones to steer clear of. Maintenance fees A bank generally charges this fee if you go below a certain balance in your account. Some banks may waive this if you have a direct deposit into your account, though it might have to exceed a certain dollar amount. How to avoid this fee: Find a bank that doesn't charge a maintenance fee or one that has a low minimum balance. Also, find a bank that will let your direct deposit waive the monthly maintenance fee. Overdraft fees Keep an eye on your account using an app, online banking or a checkbook register. How to avoid this fee: Sometimes having too many bank accounts can result in an overdraft happening. Consolidating accounts could prevent this from happening. Planning and budgeting can also help you prepare for expenses. ATM fees Using an out-of-network ATM is another common fee. How to avoid this fee: Find banks that either waive a certain amount of out-of-network ATM fees or banks that have a large network or a network convenient to you. Also, you're usually able to get cash back on a debit card purchase at a grocery store, pharmacy or convenience store. There are usually limits, just like on ATM withdrawals, to how much cash back you can receive. What to expect when opening a checking account Generally, it should take under half an hour to open an account. There are some circumstances where it might take longer. The account opening process may take longer if you have a credit freeze on your credit file and the bank's policy is to contact at least one credit bureau during the account-opening process. If you have a freeze on your credit in place, check with the bank before applying to see whether you need to lift the credit freeze at only one credit bureau or whether you need to do this at multiple bureaus. What do I need to provide when opening a new checking account? This will vary from bank to bank. Here is a list of items you might need to provide or be aware of when opening a new checking account: Your legal name Social Security number or tax identification number Date of birth Occupation Email address Phone number Mother's maiden name Address Scan of your government-issued photo ID You may have to lift a credit freeze, or security freeze, from your credit file before opening a bank account. Initial deposit (If you're making it electronically from an existing account, you may need the routing number and account number for this account.) Can I open an account online? At an online bank, you're almost always able to open an account online. Many brick-and-mortar banks also let you open up accounts online. An online bank may also allow you to apply for an account over the phone. Learn more: You may also like

Lloyds, Halifax and Bank of Scotland to charge up to 49.9% overdraft fees - Yahoo Sports Posted: 23 Jan 2020 01:39 AM PST Lloyds Banking Group's 49.9% overdraft interest rate is the highest announced to date, following changes demanded last year by the City regulator. Photo: Dinendra Haria/SOPA Images/LightRocket via Getty Images Lloyds, Halifax, and Bank of Scotland customers will be charged overdraft interest rates of up to 49.9% from April. Lloyds Banking Group (LLOY.L), which owns all three brands, will implement a "risk pricing" structure which means that some customers will be charged higher rates of as much as 49.9%. The majority of the banking giant's two million current account customers will receive new annual rates of 39.9%. But it will look at customers' credit history to decide which rate to offer ⁠— meaning those with a poor credit history are likely to pay the most. The group is the latest bank to make changes to its overdraft costs following a ban on excessive fees by the Financial Conduct Authority (FCA) to combat a "dysfunctional" overdraft market. The new rules will come into force on 6 April. The rules prevent banks charging more for unarranged overdrafts than arranged ones, banning fixed daily or monthly fees. Instead banks have to charge for overdrafts using a single annual interest rate. Lloyds Banking Group's 49.9% overdraft interest rate is the highest announced to date, with many banks, including Nationwide (NBS.L), HSBC (HSBA.L), and Santander (BNC.L), setting their new rates just below 40%. READ MORE: Why your bank balance may drop today as overdraft rules change But the group said 90% of its customers with an overdraft will pay less under the new model. For the minority of customers who will pay more, the average monthly increase will be £1.89 ($2.48), according to the bank. Giving an example of the difference in borrowing costs between lower and higher price points, the bank said customers borrowing £500 over a week will pay £3.22 at 39.9% and £3.85 for 49.9% ⁠— a difference of 63p. A Lloyds Banking Group spokesman said: "We are writing to our customers to explain the new overdraft rates that will apply from April 2020. "As a result of these changes, 90% of customers with an overdraft will pay less than they do today. "The majority of customers will pay the APR of 39.9% on most of our current accounts, 27.5% on our Club Lloyds account. "Customers will be offered a personalised overdraft rate, up to 49.9%, depending on their circumstances. "We have not charged unarranged overdraft fees or returned item fees since 2017, and this will not change ⁠— we know this simple approach is valued by our customers." READ MORE: Monzo and Starling raise interest rates on overdrafts Christopher Woolard, executive director of strategy and competition at the FCA, said: "Our changes expose the true cost of an overdraft. "We have eliminated high prices for unarranged overdrafts. This will result in a fairer distribution of charges, helping vulnerable consumers, who were disproportionately hit by high unarranged overdraft charges, and many people who use their overdraft from time to time. "Seven out of 10 overdraft users will be better off or see no change."

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