Half of us have at least two current accounts

Low savings interest rates mean more of us are opening multiple current accounts.

Half of us have more than one current account, new research by lovemoney has revealed, with 17% having three or more.

One major reason for this trend is the low interest rates paid on traditional saving accounts right now, with the top easy access account paying just 1.5% and Cash ISAs averaging 1.45%, according to financial data analysts Moneyfacts.

By contrast, you can earn up to 5% interest from a current account, with the added benefit of no restrictions on accessing your money. However, there are some hoops you have to jump through, including adding a minimum amount to accounts each month, and in some cases managing your account entirely online.

But if you have the inclination to move money between accounts then current accounts can be a great home for savings money, especially if you’re a basic rate taxpayer or you don’t pay tax at all.

High interest accounts for low amounts of cash

When it comes to interest rate alone, two current accounts stand out from the pack: the TSB Classic Plus and the Nationwide FlexDirect. Both pay 5% interest and both are fee free.

[SPOTLIGHT]The TSB Classic Plus pays 5% on balances up to £2,000. To earn this, you need to pay in at least £500 a month and manage your account entirely online.

Meanwhile, the Nationwide FlexDirect account pays 5% on up to £2,500 but only for a year. To earn this, you have to pay in at least £1,000 a month.

The Lloyds Bank Club Lloyds account also offers a decent interest rate of 4% on balances between £4,000 and £5,000. You have to pay in a minimum of £1,500 a month and set up two direct debits to qualify. However, you can also enjoy a choice of other benefits including free cinema tickets or a magazine subscription.

Decent interest rates for higher amounts of cash

The standout current account in this bracket is the Santander 123 account. It pays 3% interest on balances between £3,000 and £20,000.

You need to set up two direct debits to qualify and pay in at least £500 a month.

There is a monthly account fee of £2, however you can offset this by using this account to pay some of your bills by direct debit, which will earn you cashback.

Other options

If you want more of your money to be put in a place where you can access it easily, there are several other options.

Tesco Bank’s current account pays 3% on balances up to £3,000. You need to pay in at least £750 a month or you'll be charged a £5 monthly fee.

Bank of Scotland’s Classic Account with Vantage also pays 3% on balances between £3,000 and £5,000 when you pay in at least £1,000 each month.

Clydesdale and Yorkshire banks both pay 2% on balances and are also currently offering £150 if you make them your main account. You need to pay in at least £1,000 within 31 days of your switch completing and pay in £1,000 to earn the interest.

How to make it work

The easiest way to manage multiple accounts, and the way we know many people do it, is to set up standing orders to move money between accounts.

So, for example, you open a TSB Classic Plus account with £2,000 in it and a Santander 123 account with £5,000 in it.

You could then set up a standing order from the Santander account to pay £1,000 into the TSB account each month, easily meeting its minimum funding requirement. And then set up a standing order for £1,000 back out of the TSB account to the Santander account, meeting its funding requirement.

Tax

Don’t forget the interest you earn from your money in current accounts is taxable. If you’re a higher-rate taxpayer, you may be better off with an ISA.