Lloyds, Bank of Scotland and Halifax cut perks in current account clampdown

Interest rate cuts, fee hikes and insurance changes suggest a cooling of current account competition between the big banks.

Bank customers have been hit after various banks announced a raft of cutbacks to popular products.

Lloyds and Bank of Scotland are planning to cut the interest rates on their current accounts, whilst Halifax says it will raise fees on one of its packaged current account.

Interest rates on Lloyd’s Club Lloyds account and Bank of Scotland’s Vantage accounts will fall from 2% to 1.5% in July.

These accounts have been popular with savers as they offer better rates than most fixed-rate accounts but offer all the flexibility of an access account.

Elsewhere, Halifax will increase fees on its Ultimate Reward packaged account from £15 to £17.

The bank will also increase the excess on the mobile phone insurance the account offers, to £100 for all phones, whereas it previously ranged from £30 upwards.

Ultimate Reward account holders will also be limited to two successful claims in a 12-month period; at present there is no limit.

To round off a truly miserable week for households, NatWest, Santander, Halifax and Lloyds all announced rate hikes to some of their mortgage products.

All in all, it means that many savers at the banking giants are seeing their rates cut, while those looking to borrow are being charged increased rates.

How to ensure you don’t lose out

While all the above mentioned changes are unwelcome to say the least, the good news is you can beat even then original rates by doing a little shopping around.

For example, the interest rates offered Lloyds and Bank of Scotland’s current accounts can easily be beaten by Nationwide’s FlexDirect account.

It offers a 5% interest rate on balances up to £2,500, while TSB and Tesco offer an inflation-beating 3%.

As for packaged accounts, it’s a little more difficult to say definitively which is the best as it all depends on how you use it.

However, the Halifax hike means there’s a good chance you can get a better deal by comparing some of the top packaged accounts currently on offer.