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Banking online has never been more popular. According to the payment services group (BACS), who are responsible for the processing of direct debits, credit s and standing orders, the number of people using the internet to bank has risen from 3.5m in 2000 to 7.8m at the end of last year.
You can now do just about all your banking without the need to talk to another human being. Paying bills, transferring funds, checking account balances, starting the process of switching banks; everything can be done with a few clicks of the mouse.
Aside from the high street banks' internet services, there are also a growing number of online-only banks. Four of the main players in this field are Intelligent Finance (IF), Egg, Cahoot and Smile. Each one has a different approach to reeling in new customers.
Intelligent Finance
The Halifax online arm, Intelligent Finance (IF), provides a range of financial services including current and savings accounts, credit cards, personal loans and mortgages.
Its site is simple and easy to navigate, with all the available products, along with their interest rates, plastered on the front page. The credit card rate is 8.9%, while the Direct Access savings account pays 3.55% interest.
IF's emphasis is on offsetting and flexibility. The idea is that you hold all your financial accounts, such as your current account, savings, credit card and mortgage, in one place, but in separate 'jars,' and offset your credit balances against your debit balances. There are illustrations and demonstrations showing how the products, and combinations of products, work on the website.
In theory, this can save you a lot of money. According to IF, if you have a 25-year mortgage of ?100,000 but hold ?10,000 in your savings and current accounts you could save ?18,362 and pay your mortgage back two years and eight months early.
Current account customers get a Switch card and chequebook, and can withdraw money from Link cash machines, and make deposits by transferring money from external accounts, or by sending a cheque to IF.
Intelligent Finance
Egg
Egg, the Prudential's internet offering, claims to be the world's largest purely online bank. Its site is straightforward and easy to use. It incorporates an account aggregator so you can manage all of your bank accounts on one web page.
The bank offers a range of services to customers, including a credit card, savings accounts, personal loans and mortgages as well as ISAs and a selection of insurance products. There is no Egg current account, though.
At the moment, the Egg card charges a standard APR of 13.9%, and there are usually special introductory offers to lure in new customers.
Existing customers can get preferential rates on certain products. For example, you qualify for a 10% discount on travel and home insurance if you pay with an Egg credit card.
In order to access money held in an Egg savings accounts you need to make a transfer into an external current account, which can take three to four working days.
Egg
Cahoot
Cahoot is Abbey National's online arm. Its products include current and savings accounts, a credit card, a flexible personal loan, mortgage, insurance and share dealing.
The site also has a shopping page, where you can buy CDs, books, clothes, holidays and wine from a selection of online shops.
You can get a chequebook and debit card with a current account, and can access funds via Link cash machines.
You can't use Abbey National branches to do your banking. You can make a deposit of up to ?10,000 over the counter at most post offices, or you can send cheques in the post. Alternatively, you can set up direct debits to transfer money into your online accounts.
The credit card APR depends on a customer's credit rating. Although the majority of customers are offered the lowest available rate of 8%, according to Cahoot, each application is looked at separately. If your credit rating is not up to scratch you still might be offered a credit card, but with a higher APR.
Cahoot
Smile
Smile is owned by the Co-operative Bank and offers current accounts, credit cards, savings accounts, investments, including online share dealing, loans, and mortgages.
It also has a shopping site where you can buy a bizarre mix of alcohol, flights and roadside rescue services.
The bank has a number of special offers designed to persuade customers to buy into the whole range of different products. For example, if you have a current account with Smile then the credit card comes with an APR of 9.9%, compared to 10.5% for those without. Current account holders can also get 0.75% more interest on savings and 0.50% more on mini-cash ISAs.
For people who are interested in share dealing but not ready to risk real cash, there is an area called 'The Game' where you can register and play the stock market, using real share prices and information, with ?100,000 of fantasy cash.
Smile has jumped on the premium bank account bandwagon, and offers a current account called Smilemore, which costs ?6 a month. For that you get free travel insurance and Green Flag roadside assistance, along with a few other benefits.
Smile
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