First Direct rates match net's best

Telephone bank First Direct yesterday sought to exploit consumer dissatisfaction with standalone internet banks by saying it would be the first to offer interest rates similar to those offered by other online operations combined with an "award-winning person to person telephone service".

The bank, part of HSBC group, announced a range of products including a current account paying up to 5% on credit balances and a savings account paying up to 6%.

The 5% current account rate is higher than that paid by rivals such as Smile and First-e, but is only available to those with more than £5,000 in their account. Customers with less than £1,000 will earn 1%.

Rates for savers are also tiered, starting at 5% for those with £1 in their account and rising to 6% on more than £100,000. Also on offer is a credit card and personal loans.

First Direct announced plans to transform itself into an "e-bank" almost five months ago. The bank expects to double its 1m customer base within three years.

In a swipe at standalone rivals such as Egg, First Direct's chief executive, Alan Hughes, said it wanted customers to benefit from attractive rates, "but not at the expense of the service they receive".

"Some of our competitors support interest rates by penalising customers for calling them, while others are shut when you need them or automate their response to customers. We will not compromise our service for unsustainable headline-grabbing rates."

Mr Hughes said he expected most customers to use firstdirect.com. But those who do not use the net will not benefit from the new pricing - the existing lower rates will continue to apply to them. Banking via Wap phones will be introduced next month and TV banking is to go live in the autumn.