The Post Office: are its financial products any good?

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You can’t pop to the Post Office these days without being bombarded with offers for everything from mortgages and savings accounts to broadband and travel insurance.

But are the Post Office’s financial offerings any good?

Here we talk you through some of what’s on offer at the Post Office…

Mortgages

First up, we have Post Office mortgages.

In a bid to offer customers a ‘genuine alternative to major high street banks’, the Post Office last week announced that it would be introducing ‘mortgage specialists’ into five of its largest UK branches – with the aim to roll them out across all its branches in the coming months.

The mortgage specialists will be there to help customers make an informed decision about the suitability of their mortgage. Customers should note, however, that the Post Office’s mortgage specialists will not be able to give regulated advice and will obviously only provide information on its own mortgage range, not products available elsewhere.

In terms of the mortgages offered, the Post Office has a decent selection which covers all the main bases, aside from the lifetime tracker, said David Hollingworth, of mortgage broker London & Country. It is also ‘quite often pretty well placed’ in the best buy tables.

The Post Office's five year fixed rate deal, for example, stands up pretty well, Hollingworth said. It might not sound top but there is no arrangement fee and it goes up to 75% loan to value (LTV).

‘The Post Office’s two year tracker also holds its head up pretty well, even though its rate recently went up from 2.89% to 2.99%’, Hollingworth added. 'And while its 90% LTV offering is not exactly destroying the market, it’s not a bad range.’

However, Hollingworth urges borrowers to always check the market as while the Post Office does have some good rates, the market is always shifting.

Savings and investments

So what does the Post Office offer savers?

‘Many of Post Office’s savings products currently sit in the best buys’, said Moneyfacts. Its Premier Cash ISA account, offering 3.01%, for example, sits comfortably in the top five rates in the sector.

However, savers should note that this deal includes a 1.36% 18 month bonus. This means that once the first year is up your rate will plummet to just 1.65% unless you move your money elsewhere.

Given the Post Office’s main attraction is that it’s a familiar brand people can trust, it seems a little strange that it should want to associate itself with the controversy which surrounds temporary bonus rates. Here at The Lolly we much prefer accounts which offer simple, clear-cut rates.

The Post Office also offers savers a variety of one, two and three year fixed rate cash ISA deals paying 3.10%, 3.60% and 3.70% respectively. None of these rates are too far off the market leaders which currently pay 3.46%, 3.95% and 4%.

Savers should also note that any money they save with the Post Office is deposited with the Bank of Ireland, not the Post Office itself.

Credit cards and loans

The Post Office’s balance transfer credit card, which offers customers a 14 month 0% interest period on debt they move across, is way down the ranks in terms of competitiveness.

The current market leader, Barclaycard, for example, offers its customers a huge 22 month interest-free period and charges a balance transfer fee of just 1.45% compared to the Post Office’s 2.98% fee.

In fact, all the big lenders including Halifax, MBNA, Nationwide, NatWest, Santander, Sainsbury’s, Tesco Bank and even The AA, beat the Post Office’s 14 month 0% deal.

Regardless of how it fares against its competitors, however, a 14 month holiday from interest payments is still a good deal for those aiming to repay their debt more quickly.

The Post Office also has a decent range of personal loans, offering borrowers a variety of loan sizes between £2,000 and £25,000 with repayment periods of between one and seven years.

Although, according to Moneyfacts, while the Post Office’s loans appear within the top 10 across the three main tiers – £3,000 over three years, £5,000 over three years and £10,000 over five years – as the market for loan rates gets more competitive the Post Office rates average in comparison. Its loans are also only available online.

Travel insurance

When pitched against its rivals, Post Office travel insurance seems very expensive.

Take its annual worldwide multi-trip policy, for example. You’re looking at over £70 for its basic policy, compared to around £30 to £40 with other firms. For its classic policy, meanwhile, you’re looking at nearly £90 and premium, over £100.

And that’s just if you want to ensure you pay the same £60 excess charged by the Post Office should you need to make a claim – up this to £100 and you could well get an annual policy for as little as £20.

The Post Office’s travel insurance is also definitely not the cheapest alternative for single trips either. Its basic policy for a trip to Europe is over £22 compared to just £11.40 with online provider Protectyourbubble.com – and you actually benefit from more cover by opting for Protectyourbubble’s cheaper policy.

However, price is not the only thing to bear in mind when picking a travel insurance and many people prefer to know they have the familiar Post Office brand behind them when travelling abroad. Still, if these examples show you anything, it is to always shop around before simply opting for what you know.

Broadband

Again, it's not looking good price-wise.

A quick look on the independent price comparison website Broadbandchoices.co.uk indicates that the Post Office's broadband and phone offering is way down the best buy tables at over £26 a month compared to as little as £5 elsewhere.

Citywire's verdict

In the current market, competition, in whatever form, is always welcome and it’s great to see the Post Office begin to establish itself in the mortgage market as a real competitor to the big high street names.

But is the Post Office trying to do too much – or as a fellow colleague put it, is the Post Office a bit of a Jack of all trades, master of none? Would it be better off sticking to what it does best – posting parcels and processing passport applications?

Well, no, I think its presence in the market is needed. And as we've seen, it's offerings in the mortgage and savings sectors are pretty good.

The question therefore is whether the Post Office would do better to focus on excelling in one particular area rather than offering mediocre products across the board. On the other hand, some people may be happy to pay for the privilege of this type of one-stop shop service.

What do you think?

[demon]

no all s**t