Ditch these current accounts today

by Rachel Wait on 02 January 2011  |  19 comments
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More than half the current accounts on the market pay absolutely no interest. If your current account is one of them, it's time to switch...

You’d have to have had your head under a rock for the past couple of years not to know that savers are getting a pretty raw deal right now. Following a significant cut in the Base Rate, banks have been quick off the mark to lower the interest rates on their savings accounts.

However, it’s not just savings accounts that have taken a severe bashing. Current accounts are also being impacted by low interest rates. In fact, according to Moneyfacts, a whopping 63% of current accounts offer absolutely no credit interest at all. That’s right, none, zilch, a big fat zero!

The worst current accounts

According to Moneyfacts, there are 84 current accounts on the market that are currently NOT paying any interest. But no need to rush off to find out whether your current account is one of those, as I've done the hard work for you! The table lists all of the current accounts that pay zero interest at the moment, in alphabetical order by provider:

Source: Moneyfacts.co.uk

I'd like to highlight the banks and building societies which crop up more than once because they offer several different current accounts which pay no interest. So boo hiss to Bank of Ireland, Bank of Scotland, Barclays, The Co-operative, First Trust Bank, HSBC, Halifax, Lloyds TSB, Nationwide, Natwest, Norwich & Peterborough, Royal Bank of Scotland, Santander and Yorkshire Bank - shame on you!

If you have a current account with one of these lenders, check the table carefully because there’s a good chance you’re not receiving any interest.

Does it matter?

Of course, you could argue that a current account doesn’t exist to earn you interest. After all, that’s what a savings account is for, so does any of this really matter? However, I would argue that yes, it does. There are still current accounts on the market that DO pay interest. So why put up with one that doesn’t?

What’s more, the interest rates on certain current accounts are BETTER than you’d get on most savings accounts! So if you do have a current account that’s not giving you anything extra, it’s time to switch to one that does. Below, I’ll reveal three of the top current accounts in town.

Super Santander

A good place to start is the Santander Preferred In-Credit Rate Account. This account offers a fabulous interest rate of 5% on balances up to £2,500. 

Of course, as you’d expect, there are a few catches. Firstly, to qualify for the 5% you will need to pay £1,000 into the account each month. Fail to do so and you’ll be back to earning nothing. You will also need to transfer over all your direct debits from your existing current account – however, Santander will do the hard work for you with its switching service.

And lastly, the 5% interest rate is only valid for one year – after which point, the rate drops to 1% (although this is still more than a lot of current accounts are paying!).

What's more, some lovemoney.com readers have complained about Santander's customer service in the past, so we always post a warning about this on their accounts. 

Still, you may feel that earning 5% for a year offsets any of these drawbacks.

Luscious Lloyds TSB

Another option to consider is the Lloyds TSB Classic Account with Vantage which pays an impressive 4% interest. The drawback to this account is that you will only receive the 4% on balances between £5,000 and £7,000 – so you will need to keep a fairly decent sum of money in your current account. On the plus side, this is a permanent rate of interest, so it’s not going to disappear after a year.

Bear in mind that you will need to pay £1,000 into your account each month.

Heavenly Halifax

Finally, the Halifax Reward Current Account will give you £5 every month you pay in £1,000, whether you’re in credit or overdrawn.

What’s more, if you open this account, you’ll also be able to get an extra 0.20% in interest on theHalifax Web Saver Extra which offers a competitive interest rate of 2.50% - allowing you to earn an even more competitive 2.70%. (Bear in mind you can only make one penalty-free withdrawal per year with this savings account.)

You can find out more about all three of these accounts in Earn 4% on instant access savings.

So if your current account isn’t rewarding you, make sure you get switching today!

Compare current accounts at lovemoney.com