Donna Ferguson goes on the hunt for the best current accounts in Britain.
How much interest does your current account pay you? Believe it or not, the answer is likely to be less than 1%. With inflation hovering at around 5%, that effectively means that – from the minute you put your money into your account to the minute you take it out – the value of your hard-earned cash is being eroded.
But it doesn’t have to be. While most banks fail to reward their loyal customers, they will offer fantastic incentives to new customers. If you think you’re getting a raw deal from your existing current account, then look no further than these five fantastic current accounts:
1) First Direct - £100 in cash
When was the last time someone offered you £100 in cash, for free? First Direct, the bank which lovemoney.com readers recently voted number one for current account customer service, is doing just that with its 1st Account. Switching is relatively painless as First Direct will help you move over your direct debits and standing orders.
What’s the catch? You have to pay in £1,500 a month to qualify, or else you'll have to pay £10 a month for the account.
Anything else I should know? If you’re not happy with the service you receive after a year of trying the account, First Direct will give you £100 and help you move your account!
2) Halifax - £60 for an empty current account
Each month you pay £1,000 into a Halifax Reward current account, you’ll receive £5 in cash. That might not sound like much, but you’ll get that payment, regardless of your balance – even if you have an overdraft! You can immediately withdraw the £1,000, or send it to another account each month by standing order, and you’ll still get the £5 reward.
John Fitzsimons reviews a current account which pays you £5 a month - no matter what your balance is
What’s the catch? You have to pay in £1,000 each month to qualify for the £5 reward, and you’ll get charged £1 every day you are overdrawn.
Anything else I should know? As a Halifax Reward customer, you’ll qualify for a higher interest rate on the Halifax Web Saver – pushing the rate on this instant access online savings account up from 2.8% AER to a much more competitive 3% AER.
3) Santander - £100 in cash, plus 5% on £2,500
Open the Santander Preferred Current Account and you’ll get £100 in cash. You’ll also earn a fixed rate of 5% AER on balances up to £2,500, for 12 months. If you maintain a balance of £2,500 in the account for the full year, that means you’d earn £225 in total. Unfortunately, Santander has a reputation for poor customer service among lovemoney.com readers – but there are signs it may have learned its lesson (read Santander to axe Indian call centres to find out more).
What’s the catch? You must switch over all your direct debits and pay in £1,000 a month to qualify.
Anything else I should know? Recommend the account to a friend (or partner) and you’ll get £25 when they open their account. They’ll get the £100 cashback as usual. So a couple could make £225 in cashback if they each opened an account.
4) Lloyds TSB – 3% on £5,000
[SPOTLIGHT]If you have £5,000 in savings that you need instant access to, you could do worse than to stick your dosh in the Lloyds TBS Classic Vantage Account, which pays a variable rate of 3% on balances from £3,000 to £5,000. Stick five grand in and you’ll earn £250 in interest over the year.
What’s the catch? As usual, you must pay in £1,000 a month to qualify and you cannot go overdrawn at any point during the month. If your balance drops below £3,000, your interest rate drops to 1.5%.
Anything else I should know? Interest is not paid on balances over £5,000.
5) RSB/Natwest – 2% on debit card spending
Open the RBS or Natwest Select Account and you’ll earn 2% cashback on everything you buy using your Visa debit card for six months – up to a maximum of £125 in cashback.
What’s the catch? You must pay in £1,000 a month qualify and you’ll have to spend £6,250 over six months (£1,042 a month) in order to achieve the maximum cashback reward of £125.
Anything else I should know? Unlike the other deals, existing current account customers are eligible to apply for this deal, but you have go through the hassle of switching accounts like everyone else.
More: HSBC imprisons customer for her overdraft | The best accounts for overdrafts