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How does the new M&S current account stack up against its rivals?

Lucinda Beeman
Written By:
Lucinda Beeman

Today marks the latest shake up in the retail banking industry as M&S Bank launches its first current account with no monthly fee to customers.

M&S Bank is one of a string of challenger banks – including Metro Bank and Post Office – hoping to challenge the dominance of the traditional lenders by moving into the current account space.

The retailer said it hopes to bring “the trusted Marks & Spencer brand values to banking, delivering a new choice of bank on the high street”.

But how does the M&S product stack up against its rivals?

Authorised overdrafts

How much you pay for an overdraft depends on a range of factors, including how much, how often and for how long you are overspending on your current account – and whether it’s authorised beforehand.

The cheapest agreed overdraft accounts are those that charge interest but no monthly fees.

M&S promises “a transparent account structure” with an automatic £500 overdraft, the first £100 of which is interest-free and the remainder is charged at 15.9 per cent EAR, with no overdraft fees.

According to research by Andrew Hagger of the MoneyComms website, if you only use an overdraft of £400 for four days each month, the total annual cost is less than £10 with M&S Bank – as well as First Direct, Post Office, Metro Bank and Nationwide Building Society FlexAccount.

This is compared to a yearly bill of around the £80 mark for the same borrowing scenario with Lloyds Bank, TSB Classic Plus and NatWest and RBS Select.

Unauthorised overdrafts

M&S Bank has decided not to charge fees for unauthorised borrowing. Instead customers will simply pay interest.

Hagger said: “Putting it in hard cash terms if you make two debit card payments on the same day that put you into unauthorised overdraft by £120 for three days, M&S Bank will charge you just 15 pence.

“At the other end of the charging spectrum Lloyds Bank and TSB will both charge you £36.20, Norwich & Peterborough Building Society £49.18 and Nationwide Building Society( FlexAccount) £50.19 for the same short term oversight or indiscretion.”

Charges abroad

This is an area often overlooked by current account holders until they return to the UK and see the costs in black and white on their bank statement, according to Hagger.

M&S Bank will not charge for ATM cash withdrawals overseas, which puts it in the top five cheapest accounts to use aboard along with Norwich & Peterborough Building Society, Nationwide BS and fellow challenger banks Metro Bank and Post Office.

MoneyComms research shows that a family holiday scenario could easily set customers back nigh on £100 in charges with the likes of Lloyds Bank, TSB, Santander and Halifax.

Credit interest

There is no credit interest payable with the new M&S Bank account – or with Metro Bank or Post Office.

Hagger notes that the banks that are offering the top deals for in credit interest/rewards – Lloyds, Halifax and TSB – are also the most expensive for debit card charges abroad and at the more expensive end of the table for overdraft costs.


M&S Bank is offering a £100 M&S gift card for accounts switched by the seven day switching system, but Hagger insists consumers should not pick their current account based on introductory offers.

He explains: “The £100 golden hello may seem like a good idea at the time, but opt for the wrong account for the way you manage your day-to-day banking and you could soon end up paying over the odds in charges and more than wipe out the value of the freebie.”