Recommend to potential buyers: yes

Full review
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Around this time last year I had a small sum of money that I wanted to put somewhere - nothing risky, just somewhere where I wouldn't be tempted to use it and could save and add to it for a holiday this summer. I saw a pop-up for a Zurich bank account which offered the best interest rate, and a free case of wine if you were eligible which I was. I know quite a few Ciaoers took advantage of this, but a couple of weeks later, they published poor financial results and closed their online banking arm, giving each customer their wine and £200 good will with no strings attached. So, back to square 1, but with another £200 in the fund, I found Cahoot to be the next best interest rate and so joined them. I opened a current account and savings account - both of which will be the central focus of this review.

---Applying---

Applying was fairly easy and is online only. You go to their homepage, click on apply and are taken to an interim page which informs you of their eligibility criteria, and what information they are going to need from you. It's all basic straightforward stuff. You choose a login name, password, and enter your mothers maiden name and a memorable place and a memorable year - all of which will form the basis of future logging in to your account.

Once you have entered that information, you enter your address, current bank details, whether or not you want to switch your accounts over to Cahoot, and your employment details.

Stage 2 is when you choose your products that you want, ranging from current accounts and savings accounts which I chose, to loans, credit cards, mortgages, insurance and sharetrading. At this point you are given a quick decision as to whether or not you have been accepted. They point out that this decision isn't final, it's just conditional on the checks that have to be made on the information that you have given.

Stage 3 is when you tailor your accounts and homepage to make it look how you want it to.

So, all straight forward and over in 5 minutes? In theory yes, but with AOL you never can tell. After stage 1 disaster strikes - AOL throws me out, and I have to log on to the Internet again. The only problem is that when I try to log in, Cahoot doesn't have me registered as a customer and when I apply again it says I am already registered - it is supposed to bring you back to the place where you left off in the event of such a situation happening. Anyway, 1 quick call to the Cahoot helpline (in which I was answered fairly quickly and was surprised at how quickly the whole thing was over with), and the guy at the other end fixed the problem. I was to attempt to apply again, choose the same login data as I had before and I should be taken to the place that I left off. All credit to him I was - first good point for Customer Services.

Once that is completed, you receive an email confirming your conditional acceptance, and then the forms come through the post a couple of weeks later for you to sign. Once you have returned, you get all your debit cards, paying-in books etc within a week - quite quick really.

---Eligibility---

As with most financial products, there are eligibility criteria as to if you are able to open an account with them. You must be: -

--- aged 21 years old or over (surprising that it isn't 16 like most other banks)
--- a permanent resident (for at least the last 3 years) of the United Kingdom (which excludes the Channel Islands and the Isle of Man) at the time of making your application
--- not currently bankrupt or have had a court order for debt against you
--- have a valid personal email address
--- have 128-bit encryption on your computer

---Interest Rates---

With the current account, there are 2 different accounts that you can choose from, one with or one without a chequebook. The only difference apart from the lack of a chequebook is that the one without pays a slightly higher rate of interest - 3.2% AER against 3.1% AER for balances from £1 - £249,999. For those of you who have a spare £250k knocking about and are looking for somewhere to keep it, then the bank of m.lyon can do you a good deal!!!! Seriously, the rates are slightly lower at 3.00% AER without or without a chequebook. Seeing as though I have no need for a chequebook I plumped for the higher rate of interest.

For the savings account, the rates are slightly better at 3.85% AER from £1 - £249,999. Again, those of you unlucky enough to have a spare £250k will only receive 3% AER

When I applied last November, these were the best current and savings accounts for interest paid that were available. According to www.moneysupermarket.com, no one currently beats Cahoot on current accounts, but the ING Direct account are better for savings interest.

On both accounts, interest is paid on a monthly basis, and can change. However, Cahoot do guarantee that the interest rate paid will not be less than the Bank of England rate for more than 30 days. This guarantee lasts until 31st December 2003

---Fees and Charges---

There are many fees and charges attached, so before applying ensure that you read the small print very carefully. Firstly, overdrafts which are only applicable to current accounts.

There is a fee free overdraft limit of £250, after that you have the choice of 2 options, and a decision is made as to which one when opening the account.

Option 1 is the interest only overdraft - for people who hardly ever go over the £250 overdraft limit. If you do go over, you will be charged £25 for each month that you are overdrawn, and be subject to an interest rate of 8% APR for your balance by which you are overdrawn. Beware - if you have a poor credit rating, they may increase the APR to 12% or 13%.

Option 2 is the fee only overdraft - for people who are frequently overdrawn. Here there is a fixed charge of anything from £13.65 upwards depending on the size of the overdraft. It really is worth working out what type of account you want.

There are other fees and charges associated with the current account, but nothing that you wouldn't find at any other high street bank. For example, any direct debits or standing orders that are returned, and any cheques that bounce are liable to a £20 admin fee per item.

You can withdraw cash without charge at any LINK machine, however withdrawals from a non-Link machine will be subject to a 1.5% fee with a minimum of £1.50. Use of your debit card abroad will incur a further 2.25% exchange fee - something which also applies to paying in foreign currencies.

There are no fees associated with the savings account.

---Other features---

The current account has a Purchase Protection Insurance which provides free automatic cover for most items purchased with your debit card costing a total of £50 or more and purchased in the same transaction. The purchased item(s) are protected against loss, theft or accidental damage for a period of 90 days from the purchase date. The most Cahoot will pay for all claims during the period of insurance is £3,500. To be eligible for cover, you must be resident in the United Kingdom or the Isle of Man at the start date and be so continuously throughout the period of insurance - so there are conditions attached, but it is a nice little add-on.

If you are moving your current account to Cahoot, Cahoot have a dedicated 'Switcher Team' who will manage the entire switching process for you and help you with any enquiries. This should in theory mean that there will be ho hitches in the transfer process.

The Cahoot webcard is a virtual card that allows you to use either your Cahoot debit card online without ever having to expose your real card numbers over the web. The Cahoot webcard works by generating one-off transaction numbers as a substitute for your real card details. It means that you can pay for things quickly, securely and conveniently online and it can be used at any website. To use the Cahoot webcard you must, sign up for the Cahoot webcard when applying for a Cahoot current account. The Cahoot webcard will be sent to you once your account has been set up. Again, this is a nice touch, and I have used it once or twice with ease.

You can also set up text and email alerts for changes to your account - something that comes in very handy to know when pay day is. Again, this is something else that can be done with ease.

---Paying in money---

Paying in money is easy for a current account. You are sent a paying-in book when your account is opened and you fill in a slip, and either take your cash or cheques to the Post Office or send cheques through the post which is my preferred method. Alternatively, you can pay in my BACS or by money transfer - you cannot pay in at any of the Abbey National branches.

With the savings accounts, you can only pay in through a transfer from another Cahoot account or via a standing order, direct debit, or BACS.

---Withdrawing money---

Now this is the bit that we like to see!!! As I mentioned before, you can withdraw money from a current account using your debit card at any LINK machine for free upto a maximum of £500 per day. You are subject to charges from any non-LINK machines. You can also pay out using direct debits or standing orders. You cannot withdraw money from the counter of an Abbey National branch. You can only write cheques if you choose the appropriate account.

From the savings account, you must transfer to another Cahoot or external account - there is no other way of obtaining your money. That is the price you pay for accepting their interest rates.

---Customer Service---

I have had no complaints on the one and only occasion that I have had cause to ring customer services with the example given when applying. I have emailed them a couple of times to ask questions about the layout, and they have replied within a couple of days, so no complaints there either. Requests for extra paying-in books and envelopes have seen them arrive at my door within a working week, so from current usage over 9 months they pass with flying colours on customer service.

---Homepage and using their website---

With Cahoot being an internet bank, the ability to have an easy to use website is essential, and Cahoot pass that with flying colours too. There are 2 option bars at the top of each page, and the only ones you will ever use is login or apply unless you are after a bit of biased information!! Once you login you are taken to an account homepage, which lists the status of all your accounts. The one thing that is slightly confusing is that they give you a current balance and an available balance for your current account, but give you no explanation as to why they are sometimes appearing to be wrong - I assume it is waiting for cheques to clear, but there is no information to help you understand your homepage. Saying that, in order to carry out transfers or set up direct debits, the relative pages are packed with step-by-step information so I can't be that critical.

I have never had any problems getting into their website and it has always been online whenever I have tried to access it - perfect service from my point of view.

---Would I recommend it?---

Overall, yes, this has really brought home the benefits of online banking for me - simple, effective, and safe way to look after your money. The ease of access to your money and to be able to view your account means that you can check how rich you are at the click of a button. The interest rates aren't brilliant, but in today's low interest world, they are the best around. I have very few bad things to say about Cahoot, they really do seem to be light years ahead of the high street banks. It's just a shame that to benefit you have to be one of the lucky ones that can access a computer with Internet facilities on a regular basis.

To apply or to find out further information, you can do it via their website at www.cahoot.co.uk