Current account rates rising
The average in-credit interest rate on a current account is rising, but too many consumers are still receiving “pitiable rates”, according to Money Expert.
Research carried out by the financial comparison site showed the average credit interest rate (that is, the rate received when the account holder is ‘in the black’)has risen to nearly 2.% from 1.6% a year ago. The proportion of current accounts charging less than 1% on positive balances is falling, this is now 45% compared to 56% a year ago.
However, this still isn’t good enough, according to Money Expert and banks should be doing more to reward customers who stay in credit. Sean Gardner, director of MoneyExpert, said: “It’s encouraging to see banks getting their houses in order and offering better interest rates for customers with positive balances.
“But let’s be honest – almost half of all accounts reward customers who are in the black with less than one% annual interest. That’s an appalling return. Given there are accounts out there offering ten times that amount of interest, customers should not settle for a raw deal.”
Money Expert found only 15 current accounts from six banks offer credit interest of above 5%. However most high street banks charge just 0.1% interest on at least one of their standard current accounts. Gardner added: “3.57% is a healthy average for accounts paying above 1%, so every customer should aim to find an account with a similar or higher rate of interest.
“This is of course not forgetting the importance of customer service and other perks – we wouldn’t necessarily recommend applying purely on price as it’s not just the account but the bank that you’re buying into. You need to be sure it’s the right place for your money.”