SEVERAL banks are making a major change to their account services in the coming weeks.
Both NatWest and Monzo are upping the fees charged on some services.
But some customers will benefit from new account freebies including free Greggs and annual railcards.
Barclays is also making a major change to the minimum repayment structure of its Barclaycard credit card.
Plus, Santander is cutting the rate offer on a top-paying easy-access savings account.
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Here's everything you need to know about the changes coming in weeks.
Barclays
Barclaycard is making a huge change to how credit card repayments work from July.
The lender is making the change to give customers "greater flexibility each month".
Minimum repayment rules will change from a tiered structure, where customers may have to pay between 2.25% and 4.25% of their overall balance, to one that calculates repayments based on each customer's circumstances.
From July 22, customers will pay the highest of either:
- 1% of their main credit card balance
- 1% of their main balance plus any interest, default fees or account fees
- Their total outstanding balance, if this is less than £5.
The new structure is understood to apply to all Barclaycard customers, resulting in 80% of customers' monthly repayments either reducing or staying the same.
It means that if you can't afford to pay off your balance in full at the end of each statement period, you'll repay much less than you had to do previously.
Relying on this type of repayment plan in the long term will cost you hundreds of pounds extra in interest.
It could also negatively affect your credit file as it'll take you much longer to clear your debt.
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More interest will be applied to your outstanding balance, too, as less is paid down each month.
For example, if you have a balance of £5,000 on a Barclaycard at 24% interest, where you only make the minimum payments and don't spend on the card.
Under the old "2.5% of the balance plus the interest charged" rule, it would take around 14 years to clear the balance.
In total, you'd expect to pay about £3,500 in interest.
But with the new "1% of the balance plus the interest charged" calculation, it will take over 30 years to clear the same balance.
You'd then end up paying a whopping £8,500 in interest.
What can I do about it?
Paying your credit card statement in full at the end of each month is the single best way to stay debt-free and avoid paying interest on your borrowing.
If you're happy with Barclaycard but want to pay the previous minimum rate, you can set up a fixed direct debit amount in the bank’s app to ensure you continue to pay the current minimum balance.
Closing your account and switching to a provider with a higher minimum repayment threshold is another option.
Monzo
Monzo is shaking up its subscription options and is offering customers three new paid-for-plans to choose from.
Extra, Perks and Max have replaced the old Monzo Plus and Premium Plans.
The cheapest plan, Extra, costs £3 a month and is £2 cheaper than the old Monzo Plus plan.
However, it includes fewer freebies than before, with customers no longer getting access to a 4.6% easy-access savings account.
But, customers can add their other bank accounts and credit cards to the app, access spare change round-ups, and more.
The new Perks plan costs £7 a comes with a free annual railcard and access to the 4.6% easy-access savings account.
The Max plan, which costs £17 a month, resembles what was once Monzo Premium, offering customers free travel insurance and more.
Perk and Max plan customers can also get a free hot drink or snack at Greggs every week.
What can I do about it?
It's always important to assess whether you need a subscription in the first place.
If you just use Monzo for everyday banking, then you can continue to do so for free with its Current Account.
If you don't travel often, it's probably not worth forking out £17 a month for the Max account, as the travel insurance might not be that valuable in these circumstances.
Visit www.monzo.com/current-account/plans to do a full comparison of what's on offer.
NatWest
NatWest is upping the fees on some of its packaged bank accounts.
The Reward Black account is going from £31 to £36 per month, and the Reward Platinum £20 to £22 per month.
The change will take affect from June 28.
NatWest said that the main drivers of the fee increases are the insurance associated with these accounts and the claim rate experienced by its third-party providers, particularly with respect to travel, car breakdown and mobile phone claims.
It has also seen increased costs driven by inflation for other benefits, such as Concierge and Airport Lounge access.
A NatWest spokesperson said: "We're making some changes to the monthly fee with some of our packaged accounts.
"The cost of providing the benefits associated with these accounts has risen considerably in recent years, and we have frozen our prices for the last five years."
What can I do about it?
Customers can downgrade their account to an account with a reduced monthly fee or to our non-fee accounts.
NatWest says that this is easily done through a customer's mobile app or on its website.
Customers unhappy with the change can also choose to close or switch their account to another bank.
Santander
Santander is slashing the rate offered on its off-sale, variable rate Easy Access Saver Limited Edition (Issue 3) account.
It currently pays savers 5.20% on balances between £1 and £250,000.
However, on May 20, the rate offered will fall by a whole percentage point to 4.20%.
All other terms of the account, remain the same and customers can access their money at any time with no charges.
The retail bank blames the reduction of the savings rate on current market conditions.
A Santander spokesperson said: "Santander regularly reviews product rates to ensure that we continue to help our customers make the most of their money in a way that is sustainable in the changeable wider market conditions.
"Our Easy Access Saver Limited Edition (Issue 3) customers will continue to benefit from our best easy access rate of 4.20% from May."
What can I do about it?
For now, the account remains top-paying for those with savings between £1 and £25,000, according to MoneyFactsCompare.co.uk.
But once the rate drops, it could easily be beaten by other competing banks.
So, if you are trying to find the best savings rate there are websites to use that show you the best rates available.
Doing some research on websites such as MoneyFacts and price comparison sites including Compare the Market and Go Compare will quickly show you what's out there.
These websites let you tailor your searches to an account type that suits you.
There are four main types of savings accounts fixed, notice, easy access, and regular saver.
An easy-access account does what it says on the tin and usually allows unlimited cash withdrawals.
These accounts do tend to come with lower returns but are a good option if you want the freedom to move your money without being charged a penalty fee.
A fixed-rate savings account offers some of the highest interest rates but comes at the cost of being unable to withdraw your cash within the agreed term.
This means that your money is locked in, so even if interest rates increase you are unable to move your money and switch to a better account.
Some providers give the option to withdraw but it comes with a hefty fee.
Notice accounts work in a similar way, but your cash can be locked away for shorter periods as it just requires savers to give notice before they make a withdrawal.
Lastly, there is a regular saver account. These accounts generate decent returns, but only if you pay a set amount each month.
