The returns on the Current Account Direct from Clydesdale Bank and Yorkshire Bank have been slashed.
Clydesdale Bank and Yorkshire Bank have slashed the interest rates on their top current accounts down to 2% AER.
At the start of the month the banks cut the rates paid on their Current Account Direct deals from 4% to 3.83%. This has now been followed up with today’s further reduction.
Customers who signed up for the previously-higher rates will continue to receive those until March 2015, after which they will receive 2% too.
Even with the interest rate halving, the Current Account Direct still boasts a better return than the vast majority of current accounts. That said, there’s a handful of accounts paying even better rates that should be your first port of call.
TSB Classic Plus
The TSB Classic Plus account pays 5% AER on balances of up to £2,000.
TSB makes a big play of the fact that this isn’t just a teaser rate that will drop off significantly 12 months down the line. The account also comes with a £25 interest- and fee-free planned overdraft.
Interestingly you don’t have to immediately move over your direct debits or standing orders, as is the case with most other current accounts paying high rates of interest.
[SPOTLIGHT]To qualify for 5% from the TSB Classic Plus account, you just need to pay in £500 per month to the account and register for internet banking, and paperless statements and correspondence.
Nationwide FlexDirect
The Nationwide FlexDirect current account also pays a rate of 5%, though it is only for the first 12 months; after that it drops to 1%. You get the rate on balances of up to £2,500.
The FlexDirect also comes with a 12-month fee-free overdraft, so it’s a cracking choice for those that fall into the red as well as those looking for a decent return on their balance.
To qualify you must pay in £1,000 per month.
Club Lloyds
The Club Lloyds current account pays interest of up to 4% AER depending on your balance. Balances from £1 to £1,999 earn 1% AER, balances from £2,000 to £3,999 earn 2%, balances from £4,000 to £5,000 earn 4%.
To qualify you need to pay in £1,500 a month (or else pay a £5 monthly fee) and set up at least two different monthly direct debits from the account.
The Club Lloyds account comes with a £100 interest- and fee-free planned overdraft.
Account holders also get the choice of one 'Lifestyle Benefit' each year: currently you can choose from Gourmet Society membership, six Vue cinema tickets or an annual magazine subscription.
Compare current accounts with lovemoney.com
Santander 123
The Santander 123 current account is another current account that pays a tiered rate of interest depending on your balance.
Balances above £1,000 get 1% AER, balances above £2,000 get 2% and balances from £3,000 to £20,000 get 3%.
You also enjoy cashback on a range of direct debits. So you get 1% cashback on your water bills, Council Tax and Santander mortgage payments, 2% on gas and electricity bills and 3% on mobile, homephone, broadband and subscription TV services.
Use the Santander Current Account Switch Service when you move to the 123 current account and you also benefit from a four-month fee-free overdraft.
To qualify you will need to fund the account with at least £500 a month and set up at least two direct debits.
There is a £2 monthly fee to consider too.
Nationwide FlexPlus
The Nationwide FlexPlus current account rewards account holders with a rate of 3% AER on balances up to £2,500.
It comes with a three-month fee-free overdraft, after which you get a £100 fee-free overdraft.
The FlexPlus is a packaged account, which means you need to pay a monthly fee but you get a bunch of extra benefits as well. So in exchange for the £10 monthly fee, you’ll enjoy UK and European breakdown cover, worldwide mobile phone and family travel insurance and commission-free cash withdrawals abroad.
More on current accounts:
Overdrafts are priced unfairly, says FCA