The new bank accounts

It's all change on the banking front with a range of new accounts now available to tempt customers away from the big high-street banks. These new accounts go beyond just putting a standard current account on the internet - they aim to make customers better off.

Accounts that offset interest

Typical of these new accounts are those that offset interest, such as Woolwich's Open Plan and Halifax's Intelligent Finance (IF). Opening one of these accounts means you keep your borrowings and savings separate, but connected for interest purposes. This means all your positive balances are offset against borrowings. You can either receive interest on your savings account at mortgage rates or reduce the balance of your borrowings on which interest is calculated.

Sweeper accounts

Technology is allowing banks to operate on lower margins and pass on better interest rates on savings and current accounts. It has also facilitated sweeper accounts, which transfer cash between different accounts to ensure the customer pays the lowest interest rates on debt and receives the best returns on savings.

Woolwich's Open Plan account allows customers to set an upper limit on its current account. Any money beyond this will be swept into a savings account. It is also possible to set a lower level and, if the balance drops below this, money is automatically moved across from savings.

Cherry-picking accounts

This is likely to be a growing trend in the future as banks look to pick the customers they believe will be most profitable. Cahoot, the internet bank from Abbey National, has a range of interest rates available that are based on customers' credit records.