Jonathan Halloway

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Products Updated May 21, 2018

Current Accounts That Pay Highest Interest

We have compared and displayed all the UK current account that pay the higest rates of interest for everday use and household expenses. These accounts come with all the features and benefits you would expect from a current account with the added benefit of paying above normal rates of interest on your balance.

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Get more for your money with current accounts that pay high interest

High interest saving accounts

High interest saving accounts

If you are currently using your current account as a repository for money that goes out as quickly as it comes in, then you may never have given the interest rate on the account a second glance. However, with people budgeting more carefully than before, and trying to save for a future, more and more families are leaving money in their current account for longer periods of time. While your current interest rate might keep a few pounds trickling into your account in the course of a year, if you want to make your money work harder, you need to consider changing to an account with a higher rate of interest. You don't have to move all of your money into a saver's account if you don't want, as there is a growing stable of current accounts that offer a high interest rate to savers. Learning more about these accounts can help you to decide whether it is worth swapping your current account for one that might bring in a little more money.

How do high interest current accounts work?

A high interest rate current account offers a higher rate of APR return for the money in your account. They pay out high rates of interest, sometimes more than savings accounts offered by the same bank. These interest rates can come close to 5% APR for some accounts, although others are considerably lower. These high rates mean that you can get as much as £4-5 for every £100 that you have in the bank. In order to claim these higher rates of interest, you may have to have a considerable income, and enough money coming into the account to ensure that you keep earning the highest rate of interest.

Some current accounts with high rates of interest, and how to use them

Make your money work harder

Make your money work harder

Most of the UKs banks offer a high interest current account. The rates on offer vary substantially between them, with some offering only between 1 and 3% while others offer the full 5%. Nationwide is the best for this, with their FlexDirect account paying out 5% on balances up to 2500. Holders of this account can also get 0% on an overdraft for the first year, and then fees of only 50 pence per day from then on. The major downside with this account is the amount of money that has to be put into the account each month, which is at least £1,000. If this is not in the account when the rates are calculated, there will be no interest added that month. This can be tough for those in contract work, or freelancers who may have fallow periods followed by times when they earn a great deal.

Lloyds Bank has a high interest rate current account, with 4% interest on earnings. Known as the Club Lloyds Account, this is open to all interested parties, and pays a tiered interest, so that the more you have saved in the account, the better your interest rate. Savers can put in any amount between £1 and just under £2,000 and earn 1% interest; between £2000 and just below £4000 and the rate is 2%, and between £4000 and £5000 the interest rate is 4%. Account holders must pay in £1,5000 each month, have set up two direct debits, and pay £5 for the current account.

Santander offers a 123 current account which not only has a high rate of interest, but also offers cash back and rewards. The account will pay a total of 3% when the savings reach £3,000, and balances are worked out on a daily basis. You can also get money back when you pay for bills and services through your account, including broadband/TV packages, phone services, and utility bills. However, not all companies are eligible for this, so you need to check that you can get money back from your bills. If you want to be eligible for this, you must have two direct debits on the account, and pay a monthly amount of £500. However, you also need to be able to keep your account balance above £1000. If you struggle to keep your account in the black, then you may want to look at alternative methods of saving money, since there are high fees for unarranged overdrafts (£6 a day), and even arranged overdrafts cost £1 each day, or £31 for the average month. While you may be assured by the bank that you won't be charged more than £95 a month, you may still struggle to keep your account high enough to make using the account worth the effort.