High Interest Current Accounts | moneyfacts.co.uk

High Interest Current Accounts

  - Earn interest on your current account with a high interest savings account. Compare interest paying current accounts to find the best high interest account for you.

Compare the Best High Interest Current Accounts

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Interest Rate (AER)Account FeeAdditional InformationSearch all
139 accounts

5.00%None
  • Credit interest payable on balances up to £1.5K when account is registered for online banking, paperless statements & correspondence
  • High arranged overdraft interest rate plus monthly usage fee
  • Switch Service Guarantee member
Details...
. Representative Example: Based on an overdraft limit of £500. Up to £35.00 charged at 0.00% EAR Variable. Over £35.00 charged at 19.84% EAR Variable. Up to £35.00 overdraft: fee of £0.00 per month. Over £35.00 overdraft: fee of £6.00 per month.

5.00%None
  • Share £200 with a friend when they switch their main current account to
  • At least £1,000 must be paid in each month
  • Access to Simply Rewards an exclusive website offering discounts and deals
Details...
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. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Up to £10.00 overdraft: fee of £0.00 per day. Over £10.00 overdraft: fee of £0.50 per day.

0.00%None
  • Earn up to 15% cashback from selected retailers when shopping with a Halifax credit or debit card.
  • Arranged overdraft fee £0.01 per £7.00 per day
  • £3 reward when £750 per month paid in and 2 different Direct Debit mandates held, account must be in credit at the end of each day
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Up to £6.99 overdraft: fee of £0.00 per day. Over £6.99 overdraft: fee of £0.01 per day for each complete £7.00 overdrawn.

3.00%None
  • Credit interest paid and Clubcard points awarded on card purchases
  • Internet applications only
  • Switch Service Guarantee member
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 18.90% EAR Variable. Overdraft fee of £0.00 per month.

3.00%£13.00 pm
  • Share £200 with a friend when they switch their main current account to
  • Arranged overdraft is fee based
  • Switch Service Guarantee member
Details...
Go to Site
. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Up to £250.00 overdraft: fee of £0.00 per day. Over £250.00 overdraft: fee of £0.50 per day.

1.50%None
  • Commission free travel money
  • £0.01 for every £7 borrowed per day
  • Switch Service Guarantee member
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Up to £6.99 overdraft: fee of £0.00 per day. Over £6.99 overdraft: fee of £0.01 per day for each complete £7.00 overdrawn.

1.50%£3.00 pm
  • Credit interest payable up to £5,000
  • £0.01 per £7.00 borrowed charged per day on arranged overdraft
  • Switch Service Guarantee member
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Up to £106.99 overdraft: fee of £0.00 per day. Over £106.99 overdraft: fee of £0.01 per day for each complete £7.00 overdrawn.

1.50%£5.00 pm
  • Interest paid on credit balances up to £20K
  • Arranged overdraft daily usage fee
  • Switch Service Guarantee member
Details...
Go to Site
. Representative Example: Based on an overdraft limit of £500 charged at 0.00% EAR Variable. Overdraft fee of £1.00 per day.

0.50%None
  • Credit interest payable up to £2,000
  • Fees charged for arranged overdraft usage.
  • Switch Service Guarantee member
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 12.50% EAR Variable. Overdraft fee of £6.00 per month.

0.50%None
  • Tiered credit interest payable on balances up to £85K
  • Applications via app only
  • Swtich Service Gurantee member
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 15.00% EAR Variable. Overdraft fee of £0.00 per month.

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Eligible deposits with UK institutions are protected by the Financial Services Compensation Scheme up to a maximum level of protection of £85,000 per person per institution.

Disclaimer:

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High interest bank accounts explained

We all know high interest is a good thing when talking about high interest savings accounts, and bad when talking about mortgages, credit cards or loans. But what about a bank account? Well, while you'll want to minimise the interest you are charged on your overdraft, when it comes to the interest you can get on the money you hold in your bank account, the higher the better. The table above displays those accounts that are currently offering the best bank interest rates, so you can maximise what you're getting out of your everyday funds.

On this page:

  1. What is a high interest current account?
  2. Things to watch out for
  3. Why and how would I switch bank accounts?
  4. Alternatives

What is a high interest current account?

A high interest bank account allows you to earn a high interest rate every month, so you can get something extra simply for being a loyal customer. You won't be able to put all your savings in a current account to get top returns, however, as you'll often only get the interest paid out up to a certain amount.

This means that you could earn £100 over a year if you manage to put or keep £2,000 in a high interest current account paying an annual rate of 5% every single month, but probably not much more. Usually your provider will review your account on a set day each month to check the balance, and use this amount to calculate what would be a twelfth of your annual rate to determine the amount of interest you're eligible for that month. So, in this example, you'd earn £8.33 per month by keeping your current account topped up to the maximum amount you can earn interest on. This will be paid straight into the account.

Since these accounts are designed to entice people, they may offer additional benefits, such as cashback, insurance deals or reward points. Some may even offer you cash just for switching to them (typically on the condition that you completely shut down your old account). In return, providers will usually require that you have a certain minimum income and you use it as your main account.

Things to watch out for

Providers use high interest rates to entice people who get a certain amount of money paid into their account every month. That's why they tend to have minimum annual income requirements and not pay the headline interest rate unless you pay in at least the minimum amount each month, and why some providers may offer extra cashback for direct debits and such, to ensure that you really are using their account as your default.

While some may do this simply to ensure your custom, providers may also charge a monthly fee in exchange for the benefits they are offering. Make sure that any fees the provider may require do not outweigh the extra cash you are getting from interest. This goes not just for any straightforward monthly fees, but also for more hidden costs such as overdraft charges.

Bank accounts that offer competitive (i.e. low) overdraft charges are usually not the same ones that offer high interest. Unarranged overdrafts can be costly, with some providers charging fixed fees as well as interest penalties. So, if you're someone who dips into the red on a regular basis, you may want an account with an overdraft deal instead. If, on the other hand, you're never in the red, then you don't need to watch out for such penalties when picking a new current account.

In summary, watch out for:

  • Account fees
  • Overdraft fees (read more on how overdrafts work here)
  • Funding requirements (so you don't miss out on interest)
  • Any other requirements that may affect cashback or other rewards the current account offers
  • Foreign usage fees (using your debit card abroad can be costly - consider a travel card instead)

Note that as with most financial products, current accounts are regulated by the Financial Conduct Authority (FCA), which keeps an eye on the market to makes sure fees and such aren't completely unreasonable.

Why and how would I switch bank accounts?

Many people get a bank account when they are young, maybe chosen and set up by their parents, and then keep using it for the rest of their life, never considering a change. Providers count on this loyalty, which is why you won't often find incentives added to your current account. If you want to get more out of your everyday banking, your best option is usually to switch.

Now, you may have recently seen an advertisement from a bank or building society offering a switching incentive, such as £100, for switching over to them. While this is certainly tempting, it's important to consider an account in its entirety before deciding. If you can get 5% interest every year for the foreseeable future, this will likely end up being worth more than a one-off £100, especially if the account with the switching incentive comes with a monthly fee and the alternative doesn't.

Depending on what is going on in the world, high interest accounts may offer higher rates than savings accounts. However, even if current accounts offer lower rates, there's still something to be said for using your current account as a high interest savings account. For one, regular high interest savings accounts tend to require you to set your funds aside for a long time, with no early access. A current account will generally allow unlimited easy access, as long as you fulfil the funding requirements.

Given that high interest accounts will only offer interest up to a certain amount, they are not convenient for stashing large amounts of money. A fixed rate bond as well as a competitive current account might be the best way to go. Some people have tried to maximise the interest and rewards available from high interest accounts by setting up multiple bank accounts and moving money between them. This requires a lot of work and monitoring to be successful, however, so beware.

If you've decided to switch to a high interest current account, remember that the provider will run a credit check, so make sure your credit score is up to scratch. With every credit check slightly reducing your credit score, you may also want to think twice about opening multiple high interest accounts, especially if you're planning to apply for a mortgage soon.

Once you've decided on a current account, and you're sure you fulfil all the eligibility requirements, the process should be straightforward. Check if the bank or building society you're looking to switch to is part of the Current Account Switch Service. This service guarantees that your account, including all your direct debits and standing orders, is switched over within seven days. Almost all providers will offer this nowadays, so you shouldn't have to do anything after your application has been accepted except wait for your new card and banking details.

Alternatives

What to do if your application is rejected? Well, most importantly, don't just apply for another account straight away. If your application was rejected due to a poor credit rating, do what you can to improve it first. If it was rejected because you don't quite fulfil the requirements, it might be time to look at alternatives.

To minimise the costs associated with having a bank account, you might want to look at either a free bank account or a bank account with an overdraft. These will generally be easier to get as they offer you the absence of things (fees or charges, respectively) rather than the addition of benefits.

A step further down, there are basic bank accounts, which don't tend to have overdrafts and may be great for people with bad credit, or guaranteed bank accounts, which usually don't have overdrafts and don't do credit checks, but do tend to come with monthly fees.

If you're simply not interested in obtaining a high rate of interest and making sure you put a certain amount into your account every month to maximise that interest, you could consider a packaged account instead. These accounts offer travel insurance and other things as extras, in exchange for a fee. While the FCA has cracked down on them, following cases of high fees and worthless insurance deals, there are still some packaged accounts to be found. You can even find some form of packaged account in the high interest table above, with the best high interest current accounts offering much more than just decent savings interest.

 
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