Find out how to earn as much as 5% on the balance in your current account!
I know we harp on about current account switching here at lovemoney.com, but the majority of you haven't moved on to a new bank since 1999. That means you could be missing out on a great deal by sticking with the old faithful.
Unfortunately, current account switching is tarred with the 'too much hassle' brush. But it doesn't have to be that way. These days, several banks offer dedicated switching services to make the whole process as painless as possible.
Of course, I can't promise there won't be any hitches. But I'm pretty sure most of you will find it far easier than you thought.
Switching bonus
Right now, some banks are so keen to get your business that you'll be offered some really mouth watering incentives. For instance, if you switch your direct debits to Santander’s Preferred In-Credit Rate account, you'll get £100 cash in return. The same tempting bonus is also available if you move your account to First Direct, which has a very good reputation among lovemoney.com readers for customer service.
But there's no point taking the cash unless the account stacks up. So let's take a look at what's behind the bonus:
Current accounts with switching bonuses
|
Current account |
Switching bonus |
In credit interest rate |
Funding requirement |
Good to know |
|
£100 |
5% on balances up to £2,500 for 12 months |
Account must be funded with £1,000+ per month |
Overdraft rate is 0% for four months then 19.9% AER |
|
|
£100 |
0% |
Account must be funded with £1,500+ per month |
There’s a £250 interest-free overdraft, 15.9% for overdrafts over £250 |
Earn interest
A £100 in cash is not something any of us can afford to sniff at in this climate, but if you have savings, I think a better option could be to stash part of your savings in a high interest current account instead. The best buys pay a fabulous rate of 5% and give you instant access as often as you need it. Take a look at the table below to find out more.
Top high interest current accounts
|
Account |
Rate (% AER) |
Funding requirement |
Good to know |
|
5% fixed for 12 months on balances up to £2,500 |
£1,000 a month |
Earn £100 bonus when switching main current account to Santander. Need to transfer direct debits to qualify. |
|
|
0% but earn a £5 reward every month – so £60 a year |
£1,000 a month |
Reward earn whether account in credit or overdrawn. Do not need to switch direct debits to qualify. |
|
|
4% on balances between £5,000 and £7,000 |
£1,000 a month |
Must stay in credit to earn 4% rate. Do not need to transfer direct debits to qualify. Can open up to three accounts in the same name. |
It’s worth noting that the funding requirement for these accounts is lower than the First Direct 1st Account, at only £1,000 a month.
The Santander account that pays 5% is the same account that pays £100 cashback. So it’s a good offer – but you do have to transfer your direct debits across from your existing current account to qualify for this account. Also, many lovemoney.com readers complain about Santander's customer service, so it pays to consider this aspect carefully before you sign up.
Recent question on this topic
- epsh asks:
Whats the best bank for current accounts and accessible savings accounts ? I also want online access with these.
- MikeGG1 answered "It depends on how much the savings are. If you are talking about £2,500 the answer..."
- epsh answered "I have been with Alliance & leicester, now Santander for several years. Previously with Lloyds TSB...."
- Read more answers
By contrast, you can open the other two without transferring any direct debits. So, if you don’t want to switch your current account, you could keep your existing account open and use these two as savings accounts. As long as you transferred £1,000 between the two accounts each month, you’d meet the funding requirements and could earn as much as £340 in interest in total from both accounts this year.
Remember you can only earn 4% on the Lloyds TSB Vantage account if you constantly have a balance of at least £5,000 and no more than £7,000 in the account. If you do have more than £7,000 in savings, don’t despair. You can hold as many as three Lloyds TSB Vantage accounts at once, which means you’ll be earning 4% on £21,000 while still having instant access to your savings – an unbeatable deal in today’s terrible savings market.
As for the Halifax Reward account, it doesn’t matter if your balance is £1, £100 or £1,000 – you will still be rewarded £5 a month as long as you meet the funding requirement.
More: 2,000 reasons to hate this bank | Earn 4.25% on your savings tax-free!