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Savers could use current accounts to double returns

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Savers who do not have an old account paying a competitive interest rate could consider using a current account for savings.

People who want to build a nest egg could be better off leaving money in their bank current account as many pay higher rates than their savings counterparts, the Mail on Sunday reports.

Current accounts pay an average of 1.19% credit interest, according to Moneyfacts – more than double the average instant-access account.

This is because banks are keen to attract customers to their current accounts so they can sell more lucrative products such as credit cards, insurance or investments. This is harder to do on savings accounts.

Nationwide’s FlexDirect current account pays 5% on balances up to £2,500, but you would have to pay in £1,000 a month.

Bank of Scotland and Lloyds’ Classic accounts with Vantage – an option for account holders who pay in at least £1,000 each month – pay tiered interest of 1.5% from £1 to £999, 2% from £1,000 to £2,999 and 3% from £3,000 to £5,000.

Someone who keeps £5,000 of savings in one of these accounts for 12 months would earn £150 before tax.

Customers with bigger sums to invest may be better off with Santander’s 123 account, paying 3% on balances between £3,000 and £20,000.

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