Compare High Interest Bank Accounts
High Interest Bank Accounts
Why we like it: Available for existing Santander Edge Account customers only. 7.00% AER / 6.78% gross (variable) interest up to £4,000 with 2.50% AER / 2.47% gross (variable) bonus rate for the 12 months from opening. you’ll need to continue to hold a Santander Edge current account to stay eligible for Santander Edge Saver
Why we like it: Available for existing NatWest current account holders only. Earn 6.17% / 6.00% AER/Gross p.a. (variable) interest on your first £5,000 and 1.75% / 1.74% AER/Gross p.a (variable) on anything over £5,000. Save between £1 and £150 per month, with free anytime instant access to your savings. No minimum term
Why we like it: Available for existing Royal Bank of Scotland current account holders only. Earn 6.17% / 6.00% AER/Gross p.a. (variable) interest on your first £5,000 and 1.75% / 1.74% AER/Gross p.a (variable) on anything over £5,000. Save between £1 and £150 per month, with free anytime instant access to your savings. No minimum term
Why we like it: 5.00% AER fixed (4.89% gross pa) in-credit interest on balances up to £1,500 for the first 12 months. No monthly account fee. Interest-free arranged overdraft for 12 months. Must pay a minimum of £1,000 into the account each month, from an external source (i.e. not another Nationwide account). After the first 12 months, interest rate drops to 1% AER (0.99% gross a year) variable
Why we like it: Available for existing Chase current account customers only. Chase Saver Account pays 4.1% AER (4.02% gross) variable. Interest earned daily and paid monthly. No minimum deposit, instant access to your savings. No minimum term
Why we like it: 3.50% AER/3.45% gross (variable) on balances up to £25,000. Must pay a minimum of £1,500 into the account each month. Must have 2 active Direct Debits. Arranged overdraft facility (subject to status).
Finding the best high interest bank accounts
Banks & building societies are offering customers higher than average savings account interest rates if you can be tempted to switch your banking.
With a number of banks keen to attract new customers some high-interest current accounts are paying competitive interest.
High Interest Bank Accounts
Traditionally, savings accounts have had higher rates of interest than bank accounts.
However, in this era of ultra-low base interest rates, most savings accounts offer very low rates of interest, and some of the best credit interest rates are actually offered on bank accounts at present.
As of February 2021, some of the accounts that pay interest at the highest levels were offering rates of around 2%, better than for many savings interest accounts.
Criteria applying to the higher interest rate
Before signing up to a high-interest bank account, you also need to read the small print carefully and examine just how good the ‘higher interest rate’ promise really is. For example:
- You might need to make a minimum monthly level of payment into the account and/or a specified number of payments during the month to get the advertised interest rate
- The advertised higher rate might only last for 12 months or so, after which the rate might drop dramatically. This means that if you still want an account paying a higher rate, then you might have to repeat the account switching process every year
- The higher rate might only apply to the first £1,000 or £2,000 of your balance
- You may have to pay a monthly fee to maintain the account
- There may be a requirement to open a savings account with the bank at the same time
- Some of the higher interest accounts don’t allow you to have an interest-free overdraft
The application process
Most major banks have signed up for the Current Account Switch Guarantee, under which they promise to take care of the entire process and to transfer all of your direct debits and standing orders to the new account within seven days.
They should give you a refund if anything goes wrong and you are left out of pocket as a result.
Your new bank account should give you access to a debit card, an online banking account and a mobile banking app.
Bank accounts require you to provide proof of identity and proof of address at the application stage. For example, you might provide a passport or driving licence as proof of identity and a utility or council tax bill as proof of address.
The bank will consider your credit score and other factors when deciding whether to accept your current account application.
They will run a credit check, and your credit file will show that this check has been carried out.
Other things to consider
The prospect of earning some interest on your money is undoubtedly attractive, but it’s not the only thing you should consider when choosing a current account provider.
Before you automatically apply to the bank offering the highest current account interest rate, consider:
- You might want a bank that has a local branch
- It might be important for you to find an account with favourable overdraft rates
- You might be interested in whether cashback is available
- Do you travel regularly – are there foreign transaction fees?
- Would you prefer a packaged account, where you get insurance and other benefits in exchange for a larger monthly fee?
