The bank announced in April that it would be cutting the rate from 2 July. It upped the in-credit interest rate for Classic Plus customers in May 2018 after a plethora of IT problems.

The 3 per cent rate is only paid on balances up to £1,500. Someone maintaining a £1,500 balance for a year would earn £45 in interest, compared to £75 when the interest rate was 5 per cent.

To earn the interest, account holders need to pay in at least £500 a month, register for internet banking and log in regularly, and sign up for paperless statements and correspondence.

High interest alternative

Anyone looking for a high interest current account should consider Nationwide’s FlexDirect account which pays 5per cent interest on balances up to £2,500 for the first year. Someone maintaining a £2,500 balance could earn £63 in interest over a year.

To get the rate, you’ll need to be a new FlexDirect customer and pay in a minimum of £1,000 a month. After 12 months the rate drops to 1 per cent.

Cash switching incentives

However, current account customers can earn more cash by switching to a bank offering a cash incentive to new customers.

HSBC’s Advance account pays £175 to switchers but you’ll need to pay in at least £1,750 a month and set up at least two direct debits or standing orders. Alternatively, HSBC’s everyday bank account pays £75 to switchers and has a £500 minimum monthly pay-in.

First Direct offers £100 to switchers if you deposit £1,000 in the first three months. The account is free for six months – after that you need to maintain an average monthly balance of £1,000, pay in £1,000 a month, or hold one of a selected group of First Direct products to avoid a £10 monthly fee. If you ditch First Direct after six months, it will give you an additional £100 if you meet certain criteria.