Advertising? …we’ll always have the APR
What should I be aware about when I come across a bank account advertisement that highlights a nominal interest rate?
A few weeks ago we informed you about what to look at when checking a loan advertising campaign. Today we’ll do the same, but with advertisements about bank accounts.
If the advertising campaign highlights a bank account’s remuneration with a certain nominal interest rate, as consumers we must look at the Annual Percentage Rate (APR), which is the best way of knowing the actual profit we’ll obtain.
There’s a big difference between the Nominal Interest Rate and the Annual Percentage Rate… are you surprised? It’s because all possible variables, apart from the nominal interest rate, are included when working out the APR. As an example, these variables could be: the remuneration may be limited to a certain amount, the interest rate may vary depending on your account balance, or having certain requirements that may result in the reimbursement or not of some fees, like the account maintenance fee, or having to take out a credit card in order to obtain the advertised nominal interest rate.
We advise you to especially look out for:
If the nominal interest rate only remunerates part of your account balance or only if you have a minimum balance. Keep your eye on this.
If an account maintenance fee is charged.
If you are required to take out credit or debit cards giving them a minimum annual use and with a minimum expenditure, as well as the card’s issuance and maintenance fees.
If you are required to receive your wage, pension or other income via direct deposit in your account.
If you are required to have a minimum of direct debits in your account and for a minimum amount.
If you are required to take out a service offered by the credit institution or an insurance.
And if you are offered an item or a cash deposit in your account as a gift for taking out the account, it should be clearly specified whether it’s subject to taxation and also how long the offer is valid for.