Britain's Worst Bank Accounts!

Banks are ripping us off by paying pathetic rates of interest on current accounts. Our exclusive research reveals the worst offenders. Make sure your account is not on this list.

If you have £1,000 in a current account which pays an interest rate on credit balances of, say, a generous 5% a year, then you'll receive yearly interest of £50. After basic-rate tax at 20%, this falls to £40; after higher-rate tax at 40%, you get £30. So far, so good.

Now, imagine that your £1,000 earns a far lower rate of interest, say, 1% a year. The above returns would fall by four-fifths to £10, £8 and £6 respectively. These don't look so good, do they?

Finally, let's go one stage further and do the sums for the rate of interest paid by many current accounts: a frankly insulting 0.1% a year, or £1 for every £1,000. In this example, our interest collapses to a measly £1, 80p and 60p.

In order to find out just how many of us are being paid pathetic rates of interest on our current-account balances, I turned to my friends at Fool partner Moneyfacts. They kindly supplied me a list of 152 variations of current account from 38 different providers, mostly banks and building societies. That's a lot of bank accounts to review!

At one end of the scale, we have current accounts paying credit interest rates in excess of those paid by all but the very best savings accounts. At the other end of the spectrum, where almost all customers lurk, we're earning a pathetic 0.1% a year. For the record, there are 61 variations of bank accounts which pay 0.1% a year before tax on a balance of £1. Here they are, split into two tables:

Don't Buy Accounts, paying 0.1% a year

Abbey-Halifax

*Provider*	*Account name*
Abbey	The Abbey Current (Debit Option)
Bank of Ireland (NI)	Clear Account Level 3 Student (11-19) Account
Barclays Bank	Additions Additions (Option A, B or C) Additions Plus (Option A, B or C) Bank Account Bank Account (Option A or B) First Additions First Additions (Option A, B or C) Graduate Account Graduate Additions Student Additions
Citibank	Citibank Access Citibank Plus Citigold
Clydesdale Bank	Current Account Plus
First Direct	Bank Account
First Trust Bank (NI)	Bonus
Halifax	Current Moneyback

And now the rest:

HSBC-Yorkshire Bank

*Provider*	*Account name*
HSBC	Bank Account Banking for 18 - 21 Gap Year Service Bank Account Graduate Bank Graduate Plus International Student Service Passport Premier Bank Account Student Service
Lloyds TSB	Classic Gold Service Graduate Platinum Current Select Silver Current Student
NatWest	Current Plus Current Plus - Advantage Blue Graduate Step Step - Advantage Blue Student
Northern Rock	Current
Norwich & Peterborough BS	Gold Current
Royal Bank of Scotland	IPCA Key Private Bank Account
Ulster Bank (NI)	Dual Account Graduate Account Student Account
Yorkshire Bank	Current Account Plus Current Account Plus Private Offset

Of the 61 possible variations listed above, Barclays takes the wooden spoon for providing seventeen current accounts which pay 0.1% interest on £1. Yuk!

By the way, there are six upmarket accounts for private banking that pay no interest on a balance of £1. Here they are:

Upmarket Accounts paying no interest

*Provider*	*Account name*
Brown Shipley	Personal Current Account
Butterfield Private Bank	Private Bank Account
Cater Allen Private Bank	Investment Private Bank Account
Coutts & Co	Current
Hoare & Co	Current

Now let's take a look at the next tier: accounts paying more than 0.1% but less than 2% a year on £1:

Awful Accounts, paying 0.15% to 2% a year

*Provider*	*Account name*	*Rate* *(% AER)*
Royal Bank of Scotland	Royalties Gold Royalties Premier Royalties	0.15
Secure Trust Bank	Current	0.20
NatWest	Advantage Gold	0.25
Royal Bank of Scotland	Royalties Private	0.25
Ulster Bank (NI)	Current Plus Account	0.25
Coventry BS	BranchSaveMoneyManager	0.35
Bank of Ireland (NI)	Student Current Account	0.50
NatWest	Advantage Private	0.50
Norwich & Peterborough BS	Gold Current	0.60
Ulster Bank (NI)	ufirst Current	0.75
Leeds BS	Albion Cheque	0.80
Barclays Bank	Young Persons Account	1.00
Northern Bank (NI)	Northern Personal Access	1.00
Bank of Ireland (GB)	HICA	1.41
Halifax	Asset Reserve	1.46
Alliance & Leicester	Premier Current Account	1.50
Halifax	Cardcash Current	1.51

Now for the next batch: accounts paying between 2% and 4% a year on £1:

Bad Buy Accounts, paying 2% to 4% a year

*Provider*	*Account name*	*Rate* *(% AER)*
First Direct	Bank Account	2.00
First Trust Bank (NI)	Packaged Account	2.02
Halifax	Student	2.02
Northern Bank (NI)	Northern Freedom	2.02
Royal Bank of Scotland	Graduate Royalties Student Royalties	2.02
Ulster Bank (NI)	ufirst Gold Current	2.02
Chelsea BS	Classic	2.05
Wesleyan Savings Bank	Cheque Account	2.07
Cumberland BS	Current	2.20
Northern Bank (NI)	Northern Choice	2.27
Royal Bank of Scotland	R21 R21 (16-17)	2.27
Wesleyan Savings Bank	Privilege Account	2.31
Abbey	The Abbey Current (Credit Option)	2.50
HSBC	Bank Account Plus	2.50
Intelligent Finance	Current Account	3.00
Smile	Current Smilemore Student Account	3.04
Clydesdale Bank	Student Account	3.30
Yorkshire Bank	Student Account	3.30
Cumberland BS	24/7 Current Account	3.35
First Trust Bank (NI)	Student (11-18)	3.55
cahoot	Current Account	3.65
cahoot	Current No Chequebook	3.75
Coventry BS	CallSaveMoneyManager	3.76
Northern Bank (NI)	Northern Choice Plus	3.80
Coventry BS	CallSaveMoneyManager	3.90

If your current account is in any of the above tables, especially one of the 0.1% tables, then you're not in a happy place!

Finally, there are nineteen current accounts which pay between 4% and 10% a year on a credit balance of £1. However, I'm not going to reveal them here, because my Foolish friend Alison Hunt has already researched and listed the banking Best Buys in Get More Dosh From Your Current Account! If I were you, I'd switch to one of these cracking accounts today. Otherwise, your bank will happily lend your money at around 6%, pay you a tiny fraction of this sum and then pocket the difference!