If you like to keep a float of easy access money in your current account, make sure you're benefiting from a decent interest rate.
Most current accounts pay a rather paltry rate of interest when you're in credit. It makes you wonder why banks even bother paying it when the best they can do is 0.1%!
However, in the last couple of years, some banks have started offering current accounts that pay rates as good as, if not better than, ordinary high interest savings accounts.
As ever though, there are conditions. All of the high-paying accounts require you to pay in at least £500 or, more usually, £1,000 a month, which doesn't make them suitable for those on low salaries or pensions. According to the Motley Fool's comparison of current accounts, the best paying ones are as follows:
| Company | Account | AER | Interest Paid | Funding |
|---|---|---|---|---|
| Halifax | High Interest Current Account | 5.12% | Monthly | Funding of £1K per month. 0.1% paid on portion of balance over £2.5K. |
| Coventry BS | First | 5.10% | Monthly | Funding of £1K per month |
| Alliance & Leicester | Premier | 5% | Monthly | Funding of £500 per month. |
| Nationwide BS | Flex- | 4.25% | Yearly | Funding of £1K per month. |
| Lloyds TSB | Classic | 4% | Monthly | Funding of £1K per month. |
The minimum monthly funding requirement could cause problems for those who want to stick with their current bank but wish to take advantage of better interest rates elsewhere as well as for those on low incomes. However, if you can rustle up the necessary amount you could transfer the same £500 or £1,000 in and out of the account every month.
It's what I do with the three high-interest accounts that I have with the same bank. Every month I log on and shuffle the token amount back and forth between accounts. My £1,000 may only have funded the accounts for 5 seconds but I've met the necessary criteria to qualify for the higher interest paid on money already in there.
> Compare current accounts right now.