Marks & Spencer has unveiled plans to shake up the current account market by launching its first "free" account this summer.
Customers will be offered a £100 M&S gift card to switch to its new current account as well as loyalty points which they can spend in its stores and an automatic £500 overdraft, the first £100 of which is interest free.
Experts said the retailer, which attracts 21 million regular shoppers to its stores every week, could be about to tempt many consumers away from the more established banking brands with its new "mass market" account.
M&S Bank launched its first current accounts 18 months ago. The "premium" accounts which it already offers charge fees of £120 to £210 a year in return for a package of perks.
Its first bank branches were opened in 2012, offering seven days a week banking facilities which mirror store opening hours and a pager service meaning customers can carry on with their shopping instead of queuing. M&S, which has rolled out 29 bank branches so far, said the new account can be operated in branch, online or over the phone.
The new M&S Current Account will charge customers who go overdrawn by more than £100 a rate of 15.9% EAR on the remainder. Customers will be alerted by text if they are nearing their limit and they will not be charged transaction fees for overseas ATM withdrawals using the bank's debit card.
There will be no in-credit interest but account holders will be able to build up loyalty points on their debit card spend. They will get one point for every £1 spent in M&S stores or on its website when using the bank's debit card and £1 in store vouchers will be paid out for every 100 points earned. The M&S vouchers earned through the account will be sent out quarterly.
Crawford Prentice, deputy CEO of M&S Bank, told the Press Association: "This brings M&S Bank as an option to a much broader audience."
He said the bank, which has 3.7 million existing customers, is already finding that the busiest times of day in its branches are those when other banks' doors are shut.
The new account will also give customers access to special offers on other products such as loans and savings accounts.
M&S plans to give more details about exactly when the account will become available closer to launch this summer. Existing customers will have access first, before it is rolled out widely.
Andrew Hagger, founder of Moneycomms.co.uk, described the new product as M&S Bank's "first mass market current account" and said it could pose a "real threat" to the high street banks.
He said: "This deal has the potential to drive a lot of new custom from account holders with the big banks who have until now been sitting on the fence, not sure where to switch to for a better deal."
Mr Hagger described the £100 interest-free overdraft buffer as " a very useful safety net when compared with some of the measly charge-free buffers of £20 or less from some competitors".
Last September, a new industry-wide customer guarantee was introduced which makes it much easier for people to ditch their old current account provider and switch to a new deal.
Under the guarantee, the length of time it takes to switch has been cut to seven working days and outgoing and incoming payments are automatically swapped over to the new account.
There have been signs of current account providers upping incentives as a wave of people have been encouraged to move - and more new players are waiting in the wings to inject fresh competition.
Tesco Bank has set out its intention to launch into the current account market in the first half of 2014, saying its deal will be designed with its customers' needs in mind and reward their loyalty.
Virgin Money has also said it intends to start offering current accounts later this year.
Rachel Springall, spokeswoman for financial information website Moneyfacts, said the new M&S account has been designed not only as a "low cost" option for consumers, but one which will reward their loyalty.
She said: "In the coming months it will be interesting to see what the other challenger banks, such as Virgin Money and Tesco Bank, are planning to launch."