Top 5 high interest bank accounts - Banking - News |

News News brings you the latest financial & economic news & reviews of the best products in the UK by our team of money experts.

Top 5 high interest bank accounts

Top 5 high interest bank accounts

Category: Banking

This article was correct at the time of publication. It is now over 6 months old so the content may be out of date.

At one time savings accounts were the only sensible place to put your hard-earned cash if you wanted to generate a meaningful return, but unfortunately that's no longer the case. Savings rates are at record low levels with any returns being minimal unless you're willing to lock your money away, but what if there was an alternative? Well, there is – and high interest current accounts could be it.

High interest current accounts are exactly what they say on the tin – current accounts that offer high rates of interest on in-credit balances. Over the last year or two the current account market has become awash with these products, many of them offering impressive rates of interest, and although they tend to have certain requirements – a minimum funding level, for example, or a time limit on the interest deal – they could be a great solution.

There've been several accounts that have hit the headlines recently too, so here at Moneyfacts we've compiled the top 5 high interest current accounts on the market.

Here are the current top 5 high interest bank accounts:

Halifax Reward
Current Account

0.00% AER
(but £5 cashback per month)
  • Regular funding of £750 per month required
  • Two monthly direct debits must be held
  • No interest BUT it offers £5 cashback per month (£6.25 gross) providing the minimum funding requirements are met
  • Earn up to 15% cashback at selected retailers
  • Introductory authorised overdraft rate of 0% for first 6 months
  • Get £100 cashback when switching accounts (provided 2 direct debits are also transferred)
  • Manage account by post, telephone, in branch and online

Penny saysPenny says…
"Although not technically a high interest account, the level of cashback offered (£5 per month) makes it work out as offering the best rate on the minimum funding amount of £750. The account must stay in credit for the monthly reward to be received and it must also be the customer's main bank account, with at least two monthly direct debits needing to be linked to it.

"However, as an added bonus the account also comes with extra incentives including a generous cashback scheme and a competitive introductory 0% overdraft period of 6 months (a usage fee applies of between £1 and £3 per day thereafter, or £5 per day for unauthorised overdrafts)."

Classic Plus

5.00% AER
  • Monthly funding of £500 required
  • 5.00% interest paid on balances up to £2,000
  • Online banking and paperless statements required
  • Authorized overdraft buffer of £25 (charged at 19.94% AER with a £6 monthly usage fee thereafter)
  • Manage account by telephone, in branch, online and at Post Office counters

Penny saysPenny says…
"The TSB Classic Plus account easily takes the second spot by paying an impressive 5.00% interest on balances up to £2,000. A small monthly funding amount of £500 is required, and customers will need to register for online banking and paperless statements to be eligible.

"Unlike some accounts there's no end date to the high interest deal, but it does come with a fairly heft interest rate on authorised overdrafts (after the first £25)."

Nationwide BS

5.00% AER
  • Regular funding of £1,000 per month required
  • 5% interest paid on balances up to £2,500 for 12 months
  • Manage account by post, telephone, online and in Post Office branches
  • Introductory offer of 0% interest on authorised overdrafts for 12 months

Penny saysPenny says…
"In third place is Nationwide Building Society's FlexDirect bank account, also paying 5.00% but this time on balances up to £2,500. As an added bonus, customers won't need to pay any interest or fees for an authorised overdraft for the first 12 months.

"However, at least £1,000 must be paid into the account each month in order to qualify for this product, and the 5% rate is only paid for the first year the account is open, after which the interest rate drops to 1%."

Tesco Bank Current Account

3.00% AER
  • Monthly funding requirement of £750
  • 3% interest paid on balances up to £3,000
  • Account fee of £5 per month (waived if minimum funding requirement is met)
  • Clubcard points can be earned on purchases
  • Overdraft rate of 18.90%
  • Account can be managed via internet, branch or smartphone app

Penny saysPenny says…
"A new entry to the top five is Tesco Bank, with its newly-launched current account offering a highly competitive 3% interest on in-credit balances up to £3,000.

"If the minimum monthly funding requirement of £750 is met then the fee will be waived, while the generous points scheme adds to the appeal – shoppers can earn 5 points for every £4 spent at Tesco, 3 points for every £4 spent on Tesco fuel and 1 point for every £8 spent elsewhere."

Bank of Scotland Classic with Vantage

up to 3.00% AER
  • Monthly funding requirement of £1,000
  • Tiered rates of interest depending on balance
  • 1% interest paid on balances from £1 to £999, 2% between £1,000 and £2,999 and 3% on balances between £3,000 and £4,999.
  • Authorised overdraft rate of 19.94% AER on amounts of £25.01+ with a £6 monthly usage fee
  • Account can be managed via all channels (branch, phone, post, online, app, Post Office counters)

Penny saysPenny says…
"Next up is Bank of Scotland's Classic with Vantage account, offering up to 3% interest depending on the balance which could make it a great choice for those who like to keep their account topped up.

"It offers additional flexibility of being operated via any channel, however it does come with a fairly high authorised overdraft rate after the initial £25."

Information & Rates correct as at: 13/06/2014

What next?

Search all high interest bank accounts accounts

Search all bank accounts 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.