High interest current accounts have taken the nation by storm, and with good reason. Offering in-credit interest of up to 5%, far more than any savings account on the market, they could be perfect for those who want to see a real return on their money – but thanks to the various restrictions associated with them, it isn't always that easy. You'll need to work hard to get the most from this type of account, but with a bit of careful planning, you could easily profit from them. We're here to help make that happen.
The first step should always be researching the market to see what account could suit your needs. Have you got a small savings balance and don't want the hassle of re-evaluating the rate in a year's time? Then the TSB Classic Plus could be worth consideration, offering 5% interest on balances up to £2,000 with no end date.
Nationwide's FlexDirect account also pays 5%, this time on balances up to £2,500, however it only lasts for a year. Meanwhile, a higher savings balance could benefit from the Santander 123 Current Account, which pays 3% on balances from £3,000 to £20,000. Of course, these are just for starters, and it's worth seeing what else is out there to look at the features and restrictions of each. Which brings us onto…
Pretty much all of these accounts have restrictions of some kind, with the most common being a minimum monthly funding requirement. TSB's version has the lowest at just £500 per month, while Tesco Bank's Current Account doesn't necessarily need a monthly deposit, but if you don't pay in at least £750, you'll be charged a £5 fee.
Other requirements include the likes of signing up for online banking and paperless statements (in the case of TSB), and most require you to stay out of your overdraft to receive interest in any given month. Then there's the biggie – some will effectively ask you to use the account as your main bank account by having a minimum number of direct debits linked to it, but it could be a small price to pay.
Who says you can only have one bank account? If you want to keep it simple, then stick to one account that meets your savings requirements. But, if you really want to benefit, having more than one high interest version is the only way to go. As long as you can meet the requirements of each you could reap the rewards, and with a bit of careful management, you could be well on your way to profiting.
To maximise your gains, you need to get organised. Let's say you started with an account that had steeper requirements – Santander's version, for example. It needs at least two direct debits of household bills paid from the account, so it would effectively need to become your main bank account.
But, that's no bad thing. As well as offering impressive interest rates, it also offers cashback of 1% on water bills, your council tax bill and any Santander mortgage payments (up to £1,000 per month), 2% on gas and electricity bills, and 3% on communication bills. Combined, the benefits could more than outweigh the £2 monthly fee, particularly if you keep a hefty chunk of your savings in there, and could make it the ideal account from which to start.
Then, you're good to go! The other accounts we've mentioned have no such direct debit requirements, but they still need you to pay in a minimum amount each month. You don't need to suddenly find three more jobs to accommodate, however – just use your salary to pay each account in turn!
All you'd have to do is set up a few standing orders. Let's say your salary was paid into yourSantander account, which automatically meets the minimum funding requirement. From there, you'd set up a standing order to pay £1,000 into your Nationwide account, and the following day, you'd have another standing order from Nationwide that would see the same £1,000 go to your TSB account. And you can carry on from there, with your savings remaining untouched in each account, and the original £1,000 ending up in your main current account a few days later.
Voila! You've met the requirements for each account, and could soon see your interest build up. We did a few calculations to see just how much you could earn depending on the accounts you choose – see the results here – and as long as you keep your savings in each account, you could reap the rewards.
Compare the best high interest current accounts
Disclaimer: Information is correct as of the date of publication (shown at the top of this article). Any products featured may be withdrawn by their provider or changed at any time.
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