Current account cashback
Everything you need to know about claiming your cashback when you switch current account
High interest current accounts
What is a high-interest current account?
A high-interest account is a current account that pays you a competitive rate of interest on your in-credit balance.
Many of the best accounts require you to meet certain conditions to benefit from this interest rate, however. Account-holders may have to pay in at least £1,000 or £1,500 a month to qualify, for example.
Which current accounts pay interest?
Most current accounts pay very little or no interest on the money you keep in them.
However, some providers offer high-interest current accounts that can sometimes pay better rates than various savings accounts – especially those with easy access.
These accounts are a good way to earn interest on your money, but they often impose hefty charges if you go overdrawn - so they won't suit everyone.
How to make the most of your high-interest current account
- Shop around for the high-interest current account that pays the best rate of interest, then check you can meet the terms.
- Keep your balance as close to the upper limit as possible to maximise the interest you receive. So if the interest rate is paid on a balance of up to £1,500, try not to slip too much below that at any time
- Make a note of when the high-interest offer comes to an end, and search for a better deal when it does
- Try not to exceed the maximum amount on which high interest is paid; most accounts pay very little interest on balances above the stated maximum
- Be careful not to slip into the red. High-interest current accounts are aimed at people who stay in credit; if you go overdrawn you will be faced with substantial charges
High-interest current accounts: The pros
- You can earn an excellent rate of interest on the balance in your current account – up to a certain amount
- Some high-interest current accounts pay a better rate of interest than many savings accounts
- Some high-interest bank accounts also offer benefits such as a linked savings account with a competitive rate
High-interest current accounts: The cons
- The high interest rate generally only applies on balances up to a certain level, such as £1,500. Above this, it tends to drop to 0.1%
- High-interest rates are often introductory offers that last for the first 12 months – after which the rates drop sharply
- The terms attached to high-interest current accounts usually include a requirement to pay a certain amount in each month
- If you go overdrawn on a high-interest bank account, you are likely to be stung with above-average charges
What are the alternatives to a high-interest current account?
If you are looking for a long-term home for your savings, a high-interest current account is not the best option.
An Individual Savings Account (ISA) is always a good place to begin saving as the interest you earn isn’t taxed, so consider investing in a cash ISA first.
You can invest up to £20,000 in a cash ISA before the current tax year ends on 5 April 2020.
You can usually secure a higher rate of interest by agreeing to lock your money away for a fixed period. Alternatively, open an easy-access account for immediate access to your cash.
Comparing high-interest bank accounts
Comparing high-interest current accounts on MoneySuperMarket can help you find the right bank account for your needs.
Check the interest rate you can earn, the amount you can earn it on, the length of the offer, and the terms and conditions you must meet to qualify..
