As you will have heard, the reduction in the Bank of England Base Rate has put a downward pressure on saving interest rates. However, by being smart, it is still possible to get up to 5% on your current account savings. Here are the top three Current Accounts based on the interest rate you can get:
If you switch to a Nationwide FlexDirect account, you will get an interest rate of 5% AER on the first £2,500 of your money. This rate is fixed for the first year you hold the account so you know that it will not go down during this period. At the end of the 12 months however, it will drop to only 1%. Fortunately you don’t have to set up any direct debits (so you could open this account as an extra one). However you do need to pay in at least £1,000 a month to get the interest. Check the Nationwide website for full details.
The TSB Classic Plus current account gives you 5% if you’ve got £2,000 or less. Again, you do not need to setup any direct debits but you need to pay in at least £500 per calendar month.
This rate is a variable rate so it is possible that it will be reduced in the future but at least there is the potential that it will remain at a similar rate for longer than 12 months (whereas the Nationwide account will drop to 1%). You also get 5% cashback on the first £100 spent each month on contactless transactions or Apple Pay payments which could mean an extra £5 a month on top of your 5% interest.
Check the TSB website for full details.
This did used to be 3% but as of 1 November, it has been reduced to 1.5% although it is good for people with larger bank balances. The Santander 123 account does have a £5 a month fee but generally the 3% cashback on landline, mobile, internet and TV bills, 2% on energy and Santander home insurance and 1% on water bills, council tax and Santander mortgages more than makes up for this. Because of the monthly fee, it really only works if you use it as your main current account. Check the Santander website for full details.
Blog Posted: 3rd October 2016