Current accounts as savings vehicles

High interest current accounts can be a great addition to your savings portfolio. It can’t be denied that the shine has come off them in recent years – at one time they offered far higher rates of interest than the majority of savings accounts in the market, but recently the tables have turned, and standard savings rates have the edge once again.

That doesn’t mean they should be overlooked entirely. With the right account you could enjoy valuable additional benefits while securing a return on a portion of your savings, so let’s take a look at how you can use them to your advantage.

The top high interest current accounts can offer appealing savings rates, and because they’re current accounts, you’ll get instant access to your cash whenever you need. This can make them more convenient than many savings accounts, particularly fixed bonds, where you’ll lose access to your money for a set period of time.

Choose your account wisely and you could also enjoy plenty of other perks, such as low overdraft charges and cashback on your spending or everyday bills. Some might offer switching incentives as well, offering a little extra to add to your pot.

Let’s not forget that these accounts could simply be a great place to keep your monthly income, whether or not you’re planning on “saving”, offering a chance to accrue a bit of extra interest on top of your usual earnings.

However, there are some drawbacks to be aware of as well. Many high interest accounts have low investment limits, which means you'll only be able to keep a certain amount of cash at the headline rate, and any additional funds in the account won’t earn any interest whatsoever.

These deals also typically come with additional restrictions, such as monthly funding requirements and direct debit conditions, while some charge monthly fees as well, so it may not be that simple to profit from them.

High interest current accounts could be a great way to profit from your everyday income, but if you've got a large investment, you’ll probably want to think more traditionally. Here are some other options you can try:

Quick, simple and effective – fixed bonds offer the best savings rates among traditional accounts, so if you simply want to see your pot grow and don't mind locking it away in order to do so, it could be just the thing.

If you don’t want to lose access to your cash for too long, what about notice accounts? They could offer the ideal compromise between rate and flexibility, boasting rates that in some cases can compete with longer-term bonds but with notice periods that are far less restrictive.

Your ISA allowance should never be overlooked, particularly as your level of investment could well bring you over the personal savings allowance.

Cash ISAs could be a great place to start, or what about a stocks & shares ISA? It could be the ideal solution, particularly if you're comfortable with an element of risk, given that stocks & shares ISAs have historically outperformed their cash counterparts over the long term. However, your capital is at risk, and performance may not be repeated in the future.

So, are current accounts worth it for savings? If you have a lot to save, probably not – a far better solution could be to look at traditional savings accounts, ISAs or their stocks & shares alternatives.

As always, however, it’s best to have multiple means of saving. So, you’ll want a bank account that can offer you interest, cashback and/or cheap overdrafts, as well as perhaps an easy access savings account for an emergency pot that you can keep out of arms reach, and more long-term savings vehicles for the main bulk of your savings.