Britain's Best All-Round Bank?

The credit crunch has helped one bank become a good all-rounder. Find out which one (and no, it's probably not who you think)...

These days we live in a modern free-market world with lots of competition. And that applies to the financial market. Many of us look for the best deals for each financial product we take out, and as a result we end up as customers of a wide range of banks and building societies. 

Trouble is, dealing with more banks can mean a bit more hassle. So I thought I'd take a look and see whether there is a good all-round bank out there.

And in my opinion, the credit crunch has helped one bank stand out from the crowd. That bank is Abbey.

Having lingered in the background for quite some time, Abbey has pulled its socks up and is now appearing on many best buy tables. Here's why...

Mega Mortgages

One area where Abbey has pulled ahead of the competition is mortgages. As the credit crunch continues to squeeze other lenders, forcing them to shut their doors to many new borrowers, Abbey has welcomed them with open arms.

Abbey has been able to do this because of the funding available to its Spanish parent bank, Santander through the European Central Bank, allowing it to take an almost 16% share of the UK mortgage market in the first quarter -- almost double the share in the previous quarter.

Abbey's current best fixed rate mortgage has a rate of 5.84% until 02/09/2011, which is pretty competitive in today's mortgage terms. You will however need to stump up a 20% deposit to qualify, and there is a booking fee of £999. Higher rates are available for those with a 10% deposit.

But Abbey does not have a blemish-free record on mortgages. In fact, only weeks after heroically announcing that it was lowering some of its fixed-rate mortgage rates by 0.17%, Abbey recently increased the rates on its fixed rate deals by a whopping 0.56%.

Mind you, the increase did follow a 0.5% jump in the cost of wholesale money borrowing -- and Abbey wasn't alone in increasing its rates. Other lenders such as Nationwide quickly followed suit.

Canny Credit Cards

Abbey's Zero card has caused quite a stir in the credit card market recently. It offers a remarkable 0% on both balance transfers and purchases for six months with no fee. There are also no foreign exchange transaction fees or cash advance fees meaning Abbey Zero is a good all-round contender for your wallet.

So good in fact, that I couldn't resist applying for one myself.

Admittedly, the card only provides a short term solution for those wishing to transfer larger balances, and if you do have a significant balance to transfer, you may be better off with a card that offers a longer deal, such as Capital One's Platinum MasterCard, which gives you 0% on both balance transfers and purchases until September 2009 -- that's a gigantic 15 months' interest free credit. However, unlike the Abbey Zero card, Capital One charges a 3% fee for a balance transfer.

In my case, during my last holiday I spent nearly £22 on overseas transaction fees alone, so I see my application as an investment (well, my conscience does anyway). If you're a regular jetsetter and don't already have a good credit card for overseas use, then this credit card might also prove useful to you.

Clever Current Accounts

When it comes to hunting down the best deals, current accounts are often the forgotten products of the best-buy world, and many people are reluctant to switch because of the hassle involved.

However, the process is a lot more efficient than you think, and in return for a couple of signatures, most banks will do it all for you.

If you're willing to switch your current account, Abbey will give you a choice of either 8% credit interest on balances up to £2,500 for the first twelve months, or 0% interest on an agreed overdraft for the same period of time.

After the initial 12 months, the in-credit interest rate reverts to 2.5% (£1,000 monthly credit required). This may not seem a lot, but it is still 25 times the rate paid by Lloyds TSB, NatWest, Barclays and HSBC on their standard current accounts.

Sassy Savings

There are plenty of good savings deals to be had at the moment. However, unlike many of the table-topping savings accounts on the market, Abbey's Instant Access Saver not only gives you 6.5% on your savings, but after you've opened the account, you are free to walk into any branch to deposit and withdraw funds over the counter.

This is good if you need instant access to your money, as internet transfers can take up to three working days. It is also a good account for those who like to deal with their finances in-branch, as opposed to having their money floating in cyberspace.

You do need to bear in mind that the rate comes with an introductory bonus of 1%, payable for the first 12 months, and you need at least £1,000 to benefit from the best rate. If you prefer to operate your account online, it's best to stick with a high interest paying account with no introductory bonus and more importantly, a rate guarantee.

For example, recently lowering its minimum balance from £1,000 to £100, the Kaupthing Edge savings account pays a straightforward 6.5% and offers a guarantee that it will be at least 0.3% above the base rate until March 2012.

Likeable Loans

Generally, when you apply for a loan, the less you borrow, the higher your interest rate. However, Abbey's loan has a typical APR of 7.9% which applies to all amounts from £1,000 - £25,000, so is well worth considering if you wish to borrow a smaller amount of money.

As always, rates may talk as far as the numbers are concerned, but what about customer service? Often overlooked when it comes to choosing a bank, good customer service often goes a long way.

Admittedly, Abbey hasn't had the best reputation in the past. However, perhaps they are turning a corner.

Brokers at The Motley Fool Mortgage Service say that Abbey has held up well compared to other lenders when it comes to getting your mortgage sorted. As ever though, any comments on Abbey's customer service levels, especially in recent times would be greatly appreciated.

When it comes to choosing a bank, I'm not saying that you have to place all your eggs in one basket. However, Abbey does provide a good alternative to the 'big four' banks, with some pretty nifty products on offer at the moment.

Whether this continues is yet to be seen. But in the meantime, I'll be waiting for my Abbey Zero card to arrive in the post...

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