Minus for Lloyds Plus customers

Lloyds have been running a current account promotion

A current Lloyds advert is inviting people to "join the rush to Lloyds" and take advantage of a market leading 4.2% on its current account.

But the offer is only open to new customers, much to the annoyance of many current Lloyds account holders.

By Jennifer Clarke
BBC Radio 4's Money Box

"You can't say you've got the best current account rate. Unless you have".

That is the message of a high profile marketing campaign from Lloyds TSB at the moment.

Adverts invite customers to "join the rush to Lloyds" to take advantage of a market leading 4.2%. And what is more, the rate is guaranteed until the end of next year.

Money Box listener Margaret Fawcett was very tempted by the adverts but was disappointed to discover that because she was already a Lloyds customer, she was not eligible.

Maybe all current current account holders should close and reopen their accounts in order to get the better rate Lloyds customer Margaret Fawcett

"When I applied to swap my account I was told it was for new customers only, and my branch said while they were sympathetic, it was outside their control".

A Lloyds customer for many years, Margaret was encouraged to upgrade to a Lloyds "Plus" account earlier this year.

It gives her 3.2% interest. She knows this is an excellent rate. But thanks to Lloyds' own advertising campaign she also now knows it is no longer the best deal on the high street.

"The message I get from this ad campaign is that Lloyds have not bothered to think about their current customer base whilst targeting the new customers that they clearly want".

Direct action

Margaret proposed a possible solution.

"Maybe all current current account holders should close and reopen their accounts in order to get the better rate."

Lloyds confirmed to Money Box that the special rate of 4.2% is only available to new customers who apply before the end of December.

To get it, you have to agree to pay in £2000 every month. Customers who pay in £1000 will get 3.85%.

In both cases you also have to log on to Lloyds' internet banking site at least six times in every three month period.

Both rates are guaranteed until the end of 2004 when they will revert to the lower rates offered to existing "Plus" customers, 3.2% for those who pay in £2000 a month, and 2.85% for those committing £1000 a month.

Lloyds told Money Box it is common practice to have higher introductory rates for financial products and it pointed out that 3.2% is still a very good rate, even if it is no longer the best.

As for Margaret's suggestion that existing customers just close their accounts and reopen new ones to get the higher rate, Lloyds admitted that this would be "technically possible".

But, it added that customers would have to either move their accounts to another bank and then move it back, or just close it down completely, stopping all direct debits before reopening a new account.

That, Lloyds told Money Box, "would be a nightmare", and hardly worth doing for an extra 1%.

But Margaret disagrees. She thinks it would be worth doing. "After all," she says, "it's a point of principle".

BBC Radio 4's Money Box was broadcast on Saturday, 18 October, 2003, at 12:04 BST