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Time’s running out to bag a top high interest current account

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27/04/2020
Savers who want to lock in a lucrative high interest current account deal need to hurry as rates are being slashed over the next few days.

Last week, we reminded readers that the last 5% savings offer was disappearing on 1 May, with Nationwide cutting the rate on its popular FlexDirect current account to 2%.

People who get their applications in before 1 May will receive 5% interest on balances up to £2,500 for the first 12 months after which time the rate drops to 0.25%.

However, a host of other providers are also slicing current account interest rates in the coming days and weeks.

Santander is lowering the rate on its 123 Current Account from 1.5% on balances up to £20,000 to 1% from 5 May, while the rate on the TSB Classic Plus will drop from 3% on balances up to £1,500 to 1.5% on 2 May.

Starling Bank is also dropping its current account 0.5% credit interest rate to 0.05% on 18 May.

Rachel Springall, finance expert at data firm, Moneyfacts, said: “These cuts will be another blow to savers who are seeing interest rates plummet across the savings market as it will become more difficult to get a competitive return on their cash, but current accounts could still be a salvation for savers regardless, as the top high interest current accounts can pay better rates than most of the standard saving account market.

“During these uncertain times, it’s important consumers take time out to ensure they have the most suitable account for them to weather the storm. It’s quick and simple to switch an account using the Current Account Switch Service (CASS), and they may be financially better off to do so.”

High interest current accounts cutting rates: the details

Santander 123

The Santander 123 account pays customers 1.5% interest on balances up to £20,000. This is being cut to 1% on 5 May.

You can get up to 3% cashback on selected household bills paid by direct debit every month, capped at £5 each cashback tier each month from 5 May.

There is a £5 monthly fee and you need pay at least £500 into your account a month and have two active direct debits.

TSB Classic Plus

The TSB Classic Plus account pays customers 3% interest on balances up to £1,500. This is being cut to 1.5% on 2 May.

To be eligible for the interest, you need to pay in a minimum of £500 a month and register for internet banking and paperless statements.

Starling

The Starling Bank current account pays customers 0.5% interest on balances up to £2,000 and 0.25% on balances up to £85,000. This is falling to 0.05% interest on balances up to £85,000 on 18 May.

This is a free account and does not charge for card payments or ATM withdrawals in the UK or abroad.

You receive instant notifications when a payment leaves or enters your account and its round up feature rounds up transactions to the nearest pound and puts the change into a separate savings account.

Other interest-paying current accounts

Lloyds Bank

Lloyds Bank offers 2% interest on its Club Lloyds current account but only on balances between £4,000 and £5,000. It pays 1% on balances up to £3,999.99.

This is a free account as long as you pay £1,500 a month into your account. If you don’t, there is a £3 monthly charge.

Customers can earn up to 15% cashback on debit card purchases and can open a linked regular saver account paying 2.5% for the first 12 months on savings between £25 and £400 a month.

They can also choose either 12 digital movie rentals, an annual digital Gourmet Society membership, six cinema tickets, or an annual magazine subscription each year.

Bank of Scotland

The Bank of Scotland Classic with Vantage current account pays 1% interest on balances up to £3,999.99 and 2%  on any part of the balance from £4,000 up to and including £5,000.

You have to pay at least £1,000 into your account each calendar month, and stay in credit (above £0) during the monthly billing period. You also have to pay at least two different direct debits from your account each month.

Virgin Money

The Virgin Money current account pays 0.5% interest on balances up to £2,000.

There are no fees on overseas transactions, and you can open a linked savings account paying 1% interest on all savings.

Related: See What happens if you can’t meet the minimum monthly funding requirements for your current account? for more information.

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