TSB to cut its Classic Plus interest rate

TSB has announced that it is set to cut the interest rate on its highly competitive Classic Plus account from May this year.

The high street bank is set to cut its current rate of 3% to just 1.50% AER from 2 May 2020. This rate will continue to only be paid on balances of up to £1,500. The announcement comes at a time when many customers are also facing an increase in overdraft fees, with TSB set to increase its overdraft fees to 39.9% from the 2 April 2020.

TSB is also reducing the rate on its Classic Plus – with Control funded account, which will offer 1.50% from May.

TSB’s Classic Plus pays one of the highest interest rates in the charts today, with just Nationwide beating the rate of 3%. Nationwide Building Society offers the highest interest rate on a current account with its FlexDirect – Funded account, which pays 5% AER credit interest on balances of up to £2,500 for the first 12 months.

Commenting on TSB’s interest rate cut on its Classic Plus account, Rachel Springall, finance expert at Moneyfacts.co.uk, said: “It seemed almost inevitable to see a high credit interest rate in line for a cut in light of the upcoming rules to ban fixed overdraft fees. Providers will now have to decide whether they can sustain such lucrative perks – whether it be credit interest or some other benefit like cashback. Loyal TSB customers may now wish to look elsewhere for a higher level of credit interest, but keep in mind that there is no guarantee other providers won’t make a similar move in the months to come. Whatever consumers decide, they can switch quickly using the Current Account Switch Service (CASS) within just seven working days and it also moves everything across hassle-free (direct debits, standing orders etc).”