The Best High Interest Current Account in 2017

We all, or should, know by now that interest rates are at an all-time low.

From the saver’s point of view, the knock-on effect of the Bank of England’s current 0.25% base interest rate is a reduction of purchasing power.

Savings accounts once offered interest rates that would help grow cash in real terms, now offer rates which mean the monetary value is eroded over time.

Savings Account Rates are Lower than Many Current Accounts

To put this in perspective, the best rates of interest being offered on easy access savings accounts are around the 1.25% mark, whilst the UK’s core inflation rate recently hit a six year high of 2.7%.

That adds up to cash in a savings account losing 1.45% of its purchasing power every year.

In a reversal of historical norms, current accounts are at present offering significantly better interest rates than savings accounts.

The Best Current Account Rates are Conditional

The best current account interest rate offers do however tend to come with conditions.

Some require minimum monthly sums to be paid in, in addition to a minimum quota of direct debits to come out of the account and most also have a ceiling on the value of cash that qualifies for the highest interest rate.

The headline rate is also often only applicable for a limited period of time, such as the first year the account is held.

Some also charge fees which severely impact the headline interest rate.

There are a lot of factors for consumers to assess when selecting the most attractive current account.

However, recently published conclusions from a two-year investigation by the UK’s Competition and Markets Authority suggests that consumers should spend some time assessing current accounts and possibly regularly switching.

The investigation uncovered that consumers could save £70 a year by switching current accounts.

Some have even found loopholes by setting up transfers between many current accounts to get the best interest. Worth looking into if you have the time and inclination.

Here’s a summary of some of the top interest rate paying current accounts for 2017 and their conditions:

Top interest rate: 5%

Max balance top rate applied to: £2500 (no interest applied to balance above this)

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Qualifying Period: 1 year, then the rate drops to 1%

Minimum monthly pay-in value: > £1000

Fees/conditions: no minimum direct debit quota or account fees applied

Maximum 1-year interest value: £122.25

Top interest rate: 3%

Max balance top rate applied to: £3000 (no interest applied to balance above this)

Qualifying Period: until 2019

Minimum monthly pay-in value: > £750

Fees/conditions: minimum direct debit quota of 3

Additional benefits: one Clubcard point per £1 spent with account debit card at Tesco until April 2019 and one point per £4 spent in Tesco on the card and one point per £8 in other stores.

Maximum 1-year interest value: £90 + Clubcard points

Top interest rate: 3%

Max balance top rate applied to: £1500 (no interest applied to balance above this)

Qualifying Period: no defined cut-off date but cashback bonuses valid until July 2018

Minimum monthly pay-in value: > £500

Fees/conditions: none

Additional benefits: £5 cashback awarded for minimum 2 direct debits linked to account. £5 cashback awarded for 20+ debit card transactions per month.

Maximum 1-year interest value: £45 + up to £120 in potential cashback bonuses

Top interest rate: 2%

Max balance top rate applied to: £5000 (no interest applied to balance above this)

Qualifying Period: no defined cut-off date

Minimum monthly pay-in value: > £1000

Fees/conditions: minimum direct debit quota of 2 and account must remain in credit

Maximum 1-year interest value: £100

Top interest rate: 2%

Max balance top rate applied to: £5000 (no interest applied to balance above this)

Qualifying Period: no defined cut-off date

Minimum monthly pay-in value: > £1500

Fees/conditions: minimum direct debit quota of 2. If direct debit and monthly pay-in quotas not met a £5 monthly account fee is levied.

Maximum 1-year interest value: £100

Of course, the alternative to chasing rates is to just regularly switch to activate any generous switching bonuses.

Here are two current accounts with such a bonus.

We hope this has been helpful. If you’ve got any thoughts about current accounts, please do let us know in the comments.

 

 

Best Savings Rate
Last updated: September 20th, 2017

John Adam

John Adam co-founded iNVEZZ.com, a news, analysis and comparison portal for retail investors. iNVEZZ was acquired by Investoo in 2017.

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