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
137 accounts

0.00%None
  • Cashback on operating account
  • No credit interest paid
  • £4 reward when £800 per month paid in and 4 different Direct Debit mandates held, account must remain within agreed arranged overdraft limit
Details...
. Representative Example: Based on an overdraft limit of £500 charged at 18.90% EAR Variable. Overdraft fee of £0.00 per month.

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...
Go to Site
. 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
  • £2 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
  • Flat rate of credit interest up to £5,000
  • £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...
Go to Site
. Representative Example: Based on an overdraft limit of £500 charged at 12.50% EAR Variable. Overdraft fee of £6.00 per month.

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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. Using a high interest bank account for saving
  2. 6 of the best high interest current accounts
  3. Things to watch out for
  4. Why and how would I switch bank accounts?
  5. Alternatives

Using a high interest bank account for saving

Savings accounts used to be the only sensible place to put your hard-earned cash, but due to the effects of inflation, it can be difficult to get a real return. Savvy savers will therefore be looking for alternatives – and a high interest current account could be it.

High interest current accounts are exactly as advertised – current accounts that offer high rates of interest on in-credit balances, while some offer cash rewards. These accounts could be perfect for those seeking a decent return, as they often boast far higher rates of interest than most savings accounts – especially if you’re looking for easy access – and providers are actively competing for your business by offering a number of options and incentives.

As such, it’s little wonder that these accounts are increasingly being used as a savings vehicle, but they do have some downsides. They tend to have certain requirements, such as a minimum monthly funding amount, a time limit on the interest deal and – more often than not – an upper limit on the balance that they’ll pay interest on. They’re a lot like regular savings accounts in this way, but usually with higher limits and easier access.

6 of the best high interest current accounts


If you’re looking for an alternative for at least a portion of your savings and don’t mind a bit of active management, a high interest current account could be a great solution. We’ve compiled the top six on the market (based on a typical account balance of £1,000) to help you find the one that’s right for you.

AER
Details

Co-op Bank

The Co-operative Bank

Current Account – with Everyday Rewards

0.00% AER
(but at least £4 per month)
  • Monthly funding requirement of £800 with at least four direct debits per month
  • No interest, but £4 (£5 gross) every month that funding requirements are met and the account is in credit (must have paperless statements and log into online or mobile banking at least once a month)
  • Earn 5p (up to £1.50 per month) every time you use your debit card
  • Arranged overdrafts are fee-free with a rate of 1.46% charged per month; unarranged overdrafts also come with a penalty of £10 per month (£10 per day if overdraft is increased)
  • Account can be managed via all channels (branch, phone, post, online, app and Post Office counters)

Proudly in first place sits The Co-operative Bank, which does not offer any interest, but does allow account holders to gain a maximum of £5.50 per month as long as they can manage to adhere to the account's funding requirements and are happy to bank online or via a mobile app. As the credit is not tied to any specific amount (above £800), this could be a great choice for those who don't know how much they'll manage to put away every month, especially if they use their card for most purchases.


AER
Details

TSB

TSB

Classic Plus

5.00% AER

  • Monthly funding requirement of £500
  • 5% interest paid on balances of up to £1,500
  • Online banking and paperless statements required
  • Preferential remortgage terms
  • Interest and fee-free unarranged overdraft buffer of £10
  • Introductory arranged overdraft rate of 0% for three months (arranged overdrafts of £35+ charged at 19.84% EAR with a £6 monthly usage fee thereafter)
  • Manage account by telephone, in branch, online, via smartphone app and at Post Office counters

The TSB Classic Plus account sits in second place, offering an attractive interest rate of 5.00% on balances of up to £1,500 – provided £500 is deposited each month and customers register for online banking and paperless statements. This may be enough to sway those reluctant to commit to TSB after their recent news coverage.

Keep in mind, though, that like most high interest accounts, it's been designed for those who stay in credit and comes with a fairly hefty rate on arranged overdrafts (after the introductory deal ends) as well as unarranged overdraft fees of up to £10 per day. Customers therefore need to be sure they can keep their balance topped up.


AER
Details

Nationwide BS

Nationwide BS

FlexDirect - FundedGo to Site

5.00% AER

  • Regular funding requirement of £1,000 per month
  • 5% interest paid on balances of up to £2,500 for 12 months (1% thereafter)
  • Preferential terms for loans, credit cards and savings accounts
  • Earn cashback at selected retailers as well as discounts and deals through the Simply Rewards scheme
  • "Recommend a friend" scheme
  • Manage account by post, phone, online, via smartphone app and at Post Office counters
  • Introductory offer of 0% interest on arranged overdrafts for 12 months (overdraft fee of up to 50p per day charged thereafter)
  • Unarranged overdraft fee of up to £5 per day

Nationwide Building Society's FlexDirect bank account easily makes the top three by paying an impressive 5.00% interest on balances of up to £2,500 for the first 12 months. As an added bonus, customers won't need to pay any interest or fees on arranged overdrafts in the same period.

This account also comes with a generous benefits package, including a reward scheme and access to preferential rates on a variety of financial products. However, at least £1,000 must be paid into the account each month and the 5% rate is only paid for the first year, after which it drops to 1%. Overdraft charges are again fairly high, with unarranged overdraft fees reaching up to £5 per day.


AER
Details

Halifax

Halifax

Reward Current Account - Funded

0.00%
AER

(but £2 cashback per month)

  • Regular funding requirement of £750 per month with a minimum of two monthly direct debit mandates and no overdraft usage
  • No interest, but it offers £2 cashback per month (£2.50 gross), provided the requirements are met and the account is kept in credit
  • Arranged overdrafts are interest-free but charged at 1p per day per £7 overdrawn; no fees for unarranged overdrafts
  • Get £75 cashback when switching accounts using the Current Account Switch Service (previous account must be closed)
  • Earn up to 15% cashback at selected retailers (as long as online banking is enabled) and additional cashback when arranging a direct debit subscription with participating retailers
  • Preferential mortgage terms and travel money deals
  • Manage account by telephone, in branch, online, via smartphone app and at Post Office counters

The level of cashback on offer (£2 per month) means Halifax's deal works out as offering a top-four rate on the minimum funding amount of £750. The account also comes with extra incentives, including a generous cashback scheme and a switching incentive of £75 for those who use the Current Account Switch Service.

As is common among high interest current accounts, however, customers should note that the account must stay in credit for the monthly reward to be received, and it should ideally be the customer's main bank account, as at least two monthly direct debits need to be linked to it.


AER
Details

Tesco Bank

Tesco Bank

Current Account - Funded

3.00% AER

  • Regular funding requirement of £750 per month with at least three monthly direct debit mandates
  • 3% interest paid on balances of up to £3,000, provided conditions are met, until 01.04.2019, whereby interest must be compounded
  • Tesco Clubcard points: two points earned for every £1 spent at Tesco or Tesco fuel (excluding Esso), one for every £8 spent elsewhere
  • Both arranged and unarranged overdrafts have an interest rate of 18.90% EAR
  • Account can be managed online, in branch, over the phone and by smartphone app

Taking fifth place is Tesco Bank, with an account that offers 3% interest on in-credit balances of up to £3,000, as long as £750 is paid into the account every month and a minimum of three direct debits are held. It comes with great benefits, especially for loyal Tesco customers, with the option to accrue Clubcard points that can be spent on a range of goods and services (1,000 points give £10 in Clubcard vouchers). It also doesn't charge a fee for overdrafts, though interest charges still apply.


AER
Details

Nationwide BS

Nationwide BS

FlexPlus

Go to Site

3.00% AER

  • No minimum funding requirement
  • 3% interest paid on balances of up to £2,500
  • £13 monthly fee
  • Preferential terms for loans, credit cards and savings accounts
  • Earn cashback at selected retailers as well as discounts and deals through the Simply Rewards scheme
  • "Recommend a friend" scheme
  • Mobile phone insurance, vehicle breakdown cover and worldwide travel insurance
  • Account can be managed via all channels (branch, phone, post, online, app and Post Office counters)
  • Introductory offer of 0% interest on arranged overdrafts for three months (overdraft fee of up to 50p per day on amounts over £250 charged thereafter)
  • Unarranged overdraft fee of up to £5 per day

Nationwide has secured a second entry in the charts with its FlexPlus current account. Unusually, it has no minimum funding requirement and still pays interest of 3% on balances of up to £2,500, although it comes with a monthly fee of £13. In exchange for this charge, customers will be able to get a generous package of features, including mobile phone insurance, travel insurance and vehicle breakdown cover, as well as the incentives offered with the previously mentioned Nationwide account.

Information and rates correct as at: 17.12.2018

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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