High interest current accounts what’s the catch?
I didn’t realise this but Moneyexpert.com has obviously looked at the small print when it comes to current accounts. They say that high interest current accounts pay, on average, just 0.58 per cent for amounts over £2,500.
The high interest current account is a fairly new phenomenon, I’m sure you’ve seen the Halifax adverts which say ‘50 times more interest than Barclays, HSBC‘? Infact the main home page of the halifax.co.uk web site is advertising this right now.
Well, Moneyexpert.com say that only one of these current accounts maintains the headline interest rate above a £2,500 balance, which is Coventry’s First Account, offering 6 per cent, up to a maximum of £250,000.
If you have an Alliance and Leicester Premier Direct Account offering 8.18 per cent, an HSBC Bank Account Plus offering 7.72 per cent, or a Halifax High Interest Current Account offering 6 per cent, then I’m afraid that once your balance is around £2,000 or more then these headline high interest rates will not apply.
Moneyexpert.com say that there are a few other bank accounts paying a consistently high rate of interest, these are; Cahoot paying 3.65 per cent up to £249,999, and Yorkshire Bank’s Current Account Tracker paying 4 per cent (But this is only available to customers with an income of £75,000 or more - so that rules out the average person!).
Founder of MoneyExpert.com, Sean Gardner, said: “High interest accounts are a great addition to the market particularly for those with modest balances looking to make their cash work harder.”
“But customers need to remember that the tempting high rates are only effective for sums up to a point, normally around £2,500. If you’re keeping any more than that in your current account then you should look elsewhere. ”
“Apart from the potential exception of the Coventry, cahoot and Yorkshire accounts those looking for a substantial return on their cash are likely to be better off investing surplus funds in an ISA or savings account rather than letting it sit gathering dust”.
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