Do you have any savings? Strangely the best place to get interest right now is in a current account. Here are my four top picks.
You’ll be very lucky to even get anywhere close to 2% in a NISA or savings account at the moment. However competition is hot among high street banks, and many are offering some fantastic interest rates.
You don’t have to switch to get any of these rates, though you can read more about switching bonuses, cashback and other ways to get your bank account to pay you.
Best if you’ve no savings: Halifax
WORTH up to £60 per year
Halifax give you £5 per month when you pay in £750 a month, stay in credit and have two direct debits.
So even if you spend most of the money each month, that’s still £60 you’ll earn. There’s also a £100 switching bonus.
Best if you’ve up to £2,000: TSB
WORTH up to £80 per year after tax
You can get 5% AER before tax on a balance up to £2,000 when you pay in £500 per month to the TSB Classic Plus account.
This one is great as you don’t need to have any direct debits. You can get an additional joint account too and get the same rate.
Best if you’ve over £3,400: Santander
WORTH up to £480 per year after tax
You’ll get 3% AER interest before tax with a Santander 123 on balances between £3,000 and £20,000. Since it’s a lower rate than TSB you’ll only start earning more money once the balance is over £3,400.
You need to pay in £500 a month and have two direct debits. Plus there is a £2 per month fee. However that should be covered by cashback on many household bills.
Best if you’re saving monthly: First Direct
WORTH up to £93 per year after tax
Don’t have a lump sum but can save each month? Open or switch to a First Direct current account, then you’re eligible to pay £300 a month into customer only Regular Saver. You’ll get 6% AER.
Regular saving accounts are a bit different and I’ve explained them in our 4 Savings Account Basics post.
After 12 months the account closes, but you can always open one of the accounts above and transfer the cash and interest across at the end of the year.
The amounts of interest above are based on a basic tax payer rate of 20%. If you’re confused about interest and tax rates, read our 9 interest basics article.
There are of course other considerations such as you might need a decent overdraft or want a branch local to you. Plus other terms & conditions will apply to each account so read through them before switching or opening any. Ultimately make sure what you open works for you!
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