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Switch current account, savers advised

Switch current account, savers advised

Category: Savings

Updated: 04/08/2009
First Published: 04/08/2009

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 It is now over 6 months old so the content may be out of date.

Figures from Moneyfacts.co.uk have revealed that almost half of current accounts on the market offer consumers no return on their money whatsoever.

Twelve months ago, less than one in five (19 per cent) current accounts paid no interest. However, with money tighter than ever, the number of such accounts with no rate of return has swelled to 49 per cent.

Current accounts paying just 0.10 per cent or less have also skyrocketed, and now dominate the market, having increased from 57 per cent to 83 per cent.

The average interest rate has fallen from 1.54 per cent in August 2008 to 0.71 per cent, although this is largely thanks to Abbey and Alliance & Leicester, which are paying 6.00 per cent AER on their accounts – more than double that offered by their nearest rivals.

Unsurprisingly, while the rate of return on hard earned funds has plummeted, the average overdraft rate has increased, rising from 12.99 per cent to 13.2 per cent in the last year.

"A current account is many people people's most widely used product, yet so few will switch to get a better deal," said Michelle Slade, spokesperson at Moneyfacts.co.uk.

"Providers have been quick to bring down the credit interest rate with the base rate, but have been reluctant to pass the benefit on through their overdraft rates.

"In the past when base rate has increased, providers were quick to increase overdraft rates, but they are never keen to reduce them. It is highly probable that when base rate increases again, overdraft rates will follow suit.

"People assume that it will take too much time and effort to switch all their regular payments, but this isn't the case as the bank will do it all for you."

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 Any products featured may be withdrawn by their provider or changed at any time.