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It pays to stay 'local' for borrowing money, but if you want to earn interest loyalty loses out

Many Scots remain loyal to their local bank or building society, choosing to save or borrow with Royal Bank of Scotland or Dunfermline Building Society rather than, say, Santander or Nationwide.

But does loyalty pay? As the debate on Scottish independence heats up, Naomi Caine compares the offerings from Scottish banks and building societies with the rest of the market.

Easy access savings accounts

There are plenty of easy access savings accounts to choose from and the best deal on the market is the e-savings account from NatWest. It pays 2.85%, which includes a bonus of 1.81% for 12 months. Customers of Royal Bank of Scotland (RBS), which owns NatWest, can apply for the online account, but it does not carry the RBS brand.

Bank of Scotland makes it into the top 10 easy access accounts with its Internet Saver at 2.5%. But the rate drops to 0.1% after 12 months. The other Scottish banks and building societies do not stand up well to the competition.

You can earn 1.25% in Scottish Building Society's Instant Access Saver. The Royal Bank of Scotland's Direct Saver pays 1%. But Clydesdale Bank and Dunfermline Building Society pay a miserly 0.1% in their easy access accounts.

Verdict: Vote no.

Easy access cash Isas

The top rate on tax-free cash Isas is from the Post Office at 3.01%, including a 1.26% bonus for 18 months. A clutch of other accounts offer around 3%, pushing the Scottish banks and building societies down the best buy tables.

Bank of Scotland is again the most competitive of the home-grown easy access Isas with a rate of 2% in its Access Cash Isa. This includes a bonus of 1.5% for 12 months. You can earn 2% with the RBS Instant Access Isa, but only if you have a balance of £50,000 or more. The rate on deposits up to £9000 is a mere 0.55%. Scottish Building Society pays tiered rates of between 1.4% and 1.8%, but you only earn the higher rate on a balance of £30,000 or more. The rates at Clydesdale Bank are also tiered and range from 0.4% to 1.6%. Or you can earn 0.25% in the Dunfermline's easy access Isa.

Verdict: Vote no.

Personal loans

The rates on personal loans are almost always tiered – and the bigger the loan, the lower the rate. If we look at a loan of £5000 over three years, the best deal on the market is the Nectar Cardholder loan from Sainsbury's Bank at 7.1%. Clydesdale Bank is not far behind with a rate of 7.8%. But the others are much more expensive. Bank of Scotland would charge a whopping 20.9%. The rate at RBS would be 17.9%.

But the picture changes if you want to borrow £7500. Clydesdale Bank now ranks joint second in the best buy table with a competitive offer of 5.7%. RBS also makes it into the top 10 at 7.9%. A £7500 loan from Bank of Scotland is more costly at 8.9%, but it's a lot better than 20.9%.

Verdict: Vote yes.

Credit cards

Again, the banks offer some pretty good deals. The Bank of Scotland credit card and the RBS Your Points World MasterCard both charge 0% on purchases and balance transfers for 13 months, only slightly behind the best deal on the market – the Halifax All in One MasterCard with a zero interest rate for 15 months.

If you are more interested in the balance transfer rate, RBS offers a leading deal of 0% for 23 months on its Platinum Extended credit card. Bank of Scotland fares reasonably well with a Platinum card that charges 0% on balance transfers for 18 months. But Clydesdale Bank trails its rivals with 0% for 16 months.

The Scottish banks come up trumps again with 0% deals on purchases – all except Clydesdale Bank appear in the top 10. The best offer is from Tesco Bank with 0% for 16 months, but you can pay zero interest on purchases for 13 months with cards from both RBS and Bank of Scotland.

Verdict: Vote yes.

Overdrafts

If you have a Current Account overdraft with Bank of Scotland, fees are going up. From next Friday, the £2500 limit for a £1 a day charge is cut to £1999, the £2 a day fee limit is cut from £2999 to £2500, while planned overdrafts of £3000 and over will now incur a £3 a day fee. The unplanned overdraft rate stays at £5 a day. That means the cost of a constant £3000 overdraft will rise by 50% to £90 a month.

Verdict: Shop around.

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Finance

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