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M&S banks on appeal of free drinks and birthday gifts

New M&S current account to cost £20 a month and offers travel insurance, an automatic £500 overdraft and various M&S vouchers.


by Victoria Bischoff on Jul 18, 2012 at 11:45

M&S banks on appeal of free drinks and birthday gifts

Marks and Spencer today revealed plans to charge customers £20 a month – £240 a year – for its first ever current account.

In return for the monthly fee customers will be rewarded with a number of benefits, including travel insurance, an automatic £500 overdraft (£100 of which is interest free) and a whole host of M&S discount vouchers. Or, if you ditch the travel insurance, you can have the same account for £15 a month.

M&S (MKS.L) is also offering customers its own version of a switching bonus – 12 vouchers for 20% off M&S shopping to use in the first year, which the retailer claims have a value of up to £600 – and exclusive access to an M&S regular savings account paying 6% AER.

Customers can register their interest now, but the account itself will not be launched until October. To be eligible customers must be over 18 and under 70 (to qualify for the travel insurance) and be able to pay in at least £1,000 a month. Customers will also be tied into the account for a minimum of 12 months.

In a bid to be completely transparent M&S, has provided a full breakdown of the account’s benefits:

With travel insurance Without travel insurance
48 M&S hot drinks vouchers £127 £127
Travel insurance £245  
Birthday gift £10 £10
4 Treats and delights vouchers £45 £45
M&S vouchers £40 £40
Approximate interest earned from savings account £96 £96
M&S reward vouchers (debit card only) £19 £19
Total £582 £337

M&S announced last month that it has plans to open more than 50 bank branches in the next two years and begin offering customers current accounts and mortgages. Over three million customers already use M&S Money products, which are provided by HSBC, including credit cards, loans and savings.

Citywire Verdict

We’re disappointed.

First, it’s expensive. According to Defaqto, the average monthly packaged current account fee is £15, which is what the M&S account costs without its most valuable benefit, the travel insurance.  

What’s more, you can get travel insurance cheaper elsewhere – Nationwide offers its customers a free European annual policy, while Barclays (dare I say that name) allows its customers to pick the products they want and has a travel package for just £8.50 a month. However, it’s worth pointing out that M&S’s insurance is worldwide, so its value does depend on where you usually travel to. It also covers the whole family if you travel together – even your grandchildren.

First Direct, meanwhile, which is also an HSBC brand, offers its customers an interest-free overdraft worth up to £250 on an account you don’t have to pay for – plus you get a £100 cash switching bonus.

This means that if you’re not an avid M&S customer this account is definitely not for you. In fact, I'm not sure that even if you are a true M&S loyalist this account is for you either. 

Looking solely at the M&S discount vouchers, these are worth £241 – almost exactly the same price the account costs. Use your credit card and not your debit card and this falls to £222. Personally, I’d rather have this money in cash and retain the choice to shop and drink hot beverages somewhere other than M&S.

M&S should get points for its transparent pricing structure, but the account itself seems unnecessarily complex. Take its switching bonus for example – the 12 20% off vouchers. You can only use one voucher a month, on a maximum spend of £250 and not when buying furniture or household electrical items. I think I’d rather bank the £100 switching bonus from First Direct.

Then there is also the issue of packaged current accounts themselves. The FSA is currently investigating the market after warning that while some people get value from this type of account, many are simply being flogged an account they don’t need. According to price comparison uSwitch, just three in 10 packaged account holders use the benefits regularly.

One thing I do like is that M&S has said it will not land you with any excessive bank charges if you go over your overdraft and you can sign up for free text alerts when you're approaching your limit.

The banking industry is in desperate need of a shake-up and new entrants into the market should be welcomed with warm, loving, open arms. For me it’s just a shame that M&S’s first stab at a current account is an expensive packaged account and what's more one that falls woefully short of its competition.

But as uSwitch points out, while M&S may only be dipping a toe in the water with this account, if it goes well hopefully M&S will expand beyond its most loyal customers and give the high-street banks something to think about.

22 comments so far. Why not have your say?


Jul 18, 2012 at 12:38

Instead of giving something with one hand and taking it away with the other. Why don't they just make it free, or pay a bit to people who join?

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Geoff Harrop

Jul 18, 2012 at 12:55

Looks like more trouble than it's worth.

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Jul 18, 2012 at 13:01

RUBBISH! Banks used to pay us for giving them the benefit of our money. Now it's better for us to stuff our mattresses! And they try to kid us that they are doing us a favour!

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Alan Tonks

Jul 18, 2012 at 14:25

£20 a month for a current account with rubbish benefits, I like the free text alerts, the idiot’s guide to banking.

Apart from the other meaningless so-called benefits, you have exclusive access to a regular savings account offering 6% AER.

This sounds good on the surface, but I bet you it will be limiting the amount you can save.

The vouchers are really not worth much, better still you are limited to one a month and it has exclusions, pathetic.

Their current account in my opinion should be given a very wide berth.

Marks and Spencer would be better of trying to bring back quality goods and quality service to their core business.

I think diversifying in business is a good idea, if your core business is up to scratch, unfortunately Marks and Spencer’s is not.

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82 yo

Jul 18, 2012 at 15:31

Bonkers - it will be hard work to get your money back - amazed that M&S came up with such a convoluted product - doomed to fail

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Jul 18, 2012 at 16:11

It will be interesting to see what Tesco comes up with when/if they roll-out full retail banking.

Meanwhile I am sticking with Metro Bank a straight up and down organisation with all the limited services I require - I think that it does less than ten mortgages per annum.

Metro is not playing the international finance markets and then passing on their losses to their customers in the form of increased banking charges or any of the rest of the questionable practices that some big banks appear to enjoy.

Metro has a mere 80,000 customers and it feels secure, this being the most important aspect.

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Rob Walker

Jul 18, 2012 at 16:34

Once more M&S seem to be leveraging their legacy as a 'Quality / dependable organisation' when in fact they are now a lack-lustre me-too outfit. I think this destined-to-fail initiative may be the start of the slippery slope for M&S as their band of loyal followers finally get the message. (They used to make good underwear but now it's just pants).

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David Chapman

Jul 18, 2012 at 17:20

It really is a very poor offering - there are better deals elsewhere - It seems as though M&S have lost the plot - They should stick to getting their main stream offering of clothes and food right before branching out into things they know little about

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Jul 18, 2012 at 18:24

The way M&S have been running their business lately this is about par for the course.

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Jul 18, 2012 at 18:29

M&S Dog Insurance is the best... Ziggy gets everything he needs!

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Phili Goodacre

Jul 18, 2012 at 20:05

Desperate for a job I turned down Sainsburys Finance when I discovered they wanted me to cold sell credit cards to anyone gullible enough to sign up. When M & S Money advertised for someone with my banking background I applied and was told about their banking plans for the not too distant future and then assured that I would be converting store staff generated leads for Money products pending the bank roll out. What a joke that turned out to be. In spite of a weeks expensive training where the 'sell it properly, keep it sold' mantra was repeated day after day, the reality was that the store management were not s.upportive of the Money initiative and few of the staff on the shop floor bought into it leading to cold selling to customers with an average age of about 58 and my was it expected to be a hard sell with every obseved approach disected and criticised heavily if you dared to back off when a customer said 'no'. I am not surprized with the package they are presenting as a fresh approach to banking, I sort of guessed this was what it might be. Glad to be out of it

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Roger Savage

Jul 18, 2012 at 20:59

Amazed to see they aren't offering to offset customer's carbon footprint and shower them with 'Fairtrade' products (well, maybe a chocolate bar). They've missed a politically correct trick there that would align with their nauseating 'fully biodegradable, knit your own propaganda' approach to retailing (like so many others, to be fair, including Tossco).

The reality is they sell low quality tat imported (carbon footprint aplenty) from countries where they can buy cheaply and trade off their once proud stance as a purveyor of fine (and British-made) products.

Now they're offering a rip-off bank account with the lure of getting vouchers to buy their cheap (yet expensive) tat which they'll have bought at a fraction of the cost (even after the voucher).

I'd rather stick my money under the mattress or make it into clothes - they'd be better quality at least!

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Jul 18, 2012 at 21:37

'new entrants into the market should be welcomed '

'give the high-street banks something to think about'

It's not a new entrant. It is a high street bank. It's an HSBC brand. This is very similar to what HSBC offer directly through their branches, just tweaked for M&S. Very expensive, not for me. Given what HSBC has been up to recently, I wouldn't want any HSBC brand.

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James E.

Jul 19, 2012 at 10:06

I've been eagerly waiting for this. What a disappointment!

I was considering switching to M&S from my existing bank but not any more, this is a tired old proposition and I think it stinks.

I don't want to get hot drinks, discount vouchers are not a giveaway, you have to spend to get them.

The school leaver in their "Marketing" department thought this up should go and work for Ryanair!

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Jul 19, 2012 at 12:25

What nonsense! M & S had a real opportunity to launch a current account that would be attractive and, let's face it, the company would not have had to have done much to attract significant business. Instead we see the same old rubbish that is prevalent in clothing! Lots of bells and whistles but no substance........lots of pseudo-fashion but nothing that the customer actually wants! Unfortunately there appears to be no-one in the company that is able to grasp what is attractive to M & S's target market..............on just about every level. And it's a real pity. Has the company not researched its customer base's requirements? I guess that's an axiomatic question! Had the company done so, it certainly would not look like that!

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Hilary hames

Jul 21, 2012 at 11:10

for me it might be worthwhile as I am 65 travel insurance worldwide is getting more expensive - it would cover me and my husband and also grandchildren if travellling with us. We would also get the £96 interest as we would do the saving account -plus we shop at M&S a lot so would use vouchers.

However for anyone not in the position above its not worth it . Does anyone know who else does worldwide travel insurance? And how much on average is anyone paying for annual travel insurance if they are over 65?

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James E.

Jul 21, 2012 at 12:17

try they have a good section on travel insurance

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Hilary hames

Jul 21, 2012 at 13:37

yes, I know, on that basis for age group M&S is good insurance

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Jul 21, 2012 at 23:33

M & S are shop keepers, not bankers, although they obviously aspire to become bwankers.

They should stick to their last. Based on their proposed action, and although I have held their shares since just after 2ooo, I hink now is the time to sell, this is a step too far.

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Jul 22, 2012 at 11:08

M&S Bank is 100% owned and run by HSBC. M&S take 50% of the profit for them using their brand name and having access to their customers. They clearly think that using branch space for 50% of the profit is better than using it for selling clothes. Given the very high monthly fee on the account, they may be right if they can get enough people to open an account.

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82 yo

Jul 22, 2012 at 15:01

M&S had an input into the design of this product that was badly miss-judged and it will fail - pity, we expected better from HSBC and M&S

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Sep 24, 2012 at 22:53

I totally agree 82 yo. M & S should take care. Try to do all and do a bit badly and how the mighty Tesco has fallen. All this bank business does is invalidate the money spent on the good ad compaigns.

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