Interest paying current accounts

Current accounts are now offering better rates of interest than a lot of savings accounts making them a great option for people looking to watch their money grow.

If you combine this with the various switch rewards and ongoing deals which a lot of current accounts are also offering, you could make yourself up to an extra £200 in a year.

Not all current accounts offer interest as standard so we have listed the best options below:

1) Nationwide FlexDirect Current Account

Nationwide Building Society is the second-most-switched-to bank at the moment.

Nationwide FlexDirect pays 5% AER fixed for a year on £2,500, which would give you a maximum £122.25 interest. This rate is fixed for the first year you hold the account, which gives some security in a world of uncertain savings rates. The rate falls to 1% in subsequent years.

To qualify for this interest, you need to pay in £1,000+/month. So, if you are after an account that pays a good rate of interest, intend to stay in credit and prefer to do your banking online or over the phone then this could be the current account for you.

2) TSB Classic Plus Current Account

TSB offer a great deal on its Classic Plus Current Account. This account has one of the lowest minimum monthly pay-ins at £500 per month so is well-suited to anyone who finds it difficult to meet the minimum payments of some other accounts.

They also offer 3% AER (variable) interest on balances up to £1,500. Interest is paid monthly and to earn it you simply pay in a minimum of £500 a month and register for Internet Banking, paperless statements and paperless correspondence.

You can also earn £5 cashback every month if you have two monthly Direct Debits coming out of your account plus another £5 cashback each month where you use your debit card at least 20 times.

3) Santander 1|2|3 Current Account 

With the Santander 1|2|3 you can earn 1.5% AER on balances up to £20,000 in exchange for a £5 monthly account fee.

You can also benefit from 1-3% cashback on various of your household bills, which should more than offset the account fee for most householders.

You are also able to have two accounts in your name, but one must be joint – meaning couples can save £60,000 between them and earn interest on the total amount.

4) Virgin Money Current Account

Virgin currently only offer the Essential Current Account but are planning to add more options shortly. At the moment you can register your interest on their website for updates about any new accounts that they open.

The Essential Current Account is a great basic account which offers:

• Free withdrawals at almost all high street cash machines.
• Management of your account at Virgin Money Stores and any Post Office
• The option to earn 0.75% Gross/AER (variable) interest on the balance in your account, up to a maximum balance of £100,000. Interest is paid monthly.

Virgin is a big name internationally and as such they offer a number of benefits which help if you travel internationally regularly. Such as free use of the Virgin Lounges which come with a range of perks.