£5 a month reward for Halifax current account.

I only discovered this account today and definitiely considering changing.

They pay you £60 a year for receiv> I have switched to this account today, you have to pay £1000 minimum

Is this the account people are opening 3 of per branch and then flitting the money in and out?

No there are no catches, apart from your overdraft going up to £1 a day. So if you were say £50 overdrawn 2 days before your salary was paid in you would be charged £2. So really you need to stay in credit. Look at it as a £5 a month payrise. Every little helps.

Which is an APR of about 29000% !!!

You certainly do!

[Is it? How did you work that out? I make it (1+(£2/£50))^(365/2)-1 -- that's more like 128000%.]

Not really. It's a facility fee, not an interest charge. Interest would no doubt come on top of that!

Oh, wait, on closer inspection, that's not the case, the fee applies *instead of* interest. However, unless you've pre-arranged the overdraft, the daily fee is actually £5, not £1. So for £50 overdrawn for 2 days, you'd be charged £10, equivalent to an APR of, wait for it, about 28 quadrillion % (or thousand billion in old money, i.e. thousand million million). Whoopee!

For your £1 a day, you can overdraw up to £2500 (which would bring the APR down to 15.7% if overdrawn for 2 days, or 15.6% if for 30 days, equivalent to typical personal loan rates). Above that it goes up to £2. It's not immediately clear from the wording (if you "use an arranged overdraft over £2500"), whether the basis on which you're charged £1 or £2 depends on the arranged limit or the actual overdrawn amount being over £2500. I.e. if you've arranged to go up to £3000 but in fact only use £2000, do you get charged £1 or £2 per day?

I assumed the "fee" gets charged monthly rather than daily. The monthly interest rate is about 60.5%, which makes an APR of about 29000%

Don't lenders have to include fees associated with the loan in the APR they quote?

If you've arranged any sort of overdraft with this particular account you want your head examining.

You'd have thought so, wouldn't you? Perhaps there's a grey area which they're able to exploit. Maybe it's not a fee but a penalty. :-)

But if they did have to quote an APR, it would need to be based on a "typical" loan amount. What's that in this context? You pay £1 per day for going overdrawn by £50 or by £2500 or by £1. The monthly interest rate could be as low as 1.2% or as high as

3000% (or more if overdrawing by less than a pound counts).

Luckily for the banks, people who want their heads examining are not exactly in short supply.

However, what you say is not necessarily true.

Provided you overdraw by the full £2500 (or by more than £5000 at the £2 per day rate), the fees are competitive with credit card and personal loan interest rates. And that's assuming you stay overdrawn for the whole month, which is not what this account is intended for.

If you take the £5 "reward" into account, you can go overdrawn by up to £2500 for 5 whole days and it'll cost you nothing.

One thing this account could be vaguely useful for is just collecting the reward. The condition, remember, is that you have to pay in £1000 each month. You could open 30 such accounts, pay £1000 into the first of these accounts, and set up a standing order on it (call it account 1) to pay £1000 on the 1st of every month into account 2. Also set up a standing order on account 2 to pay £1000 on the 2nd of each month into account 3. And so on. Each of the 30 accounts would qualify for a £5 monthly award, so you'd be earning £1800 a year on a "capital investment" of only £1000. I wonder what mechanisms they have in place to prevent this sort of exploit.

The fact that they don't support faster payments for starters, so you could only cycle it round about 6 or 7 times in a month.

Also, they probably don't let you open more than one account per address without asking questions, just like with the 10% regular saver account last summer.