Best ever current accounts

Interest rates on savings accounts might not be anything to write home about. But the rates on current accounts most certainly are!

And competition in this area has just stepped up a gear after Lloyds and TSB both launched brand new current accounts on to the market today.

But with so many accounts to choose from, you might be feeling a little baffled about which one is right for you. So here, we highlight the top deals and who they suit best, depending on what kind of balance you keep in your account.

Santander 123 current account

BEST FOR: Balances of over £3,000

Pays: Up to 3.00% AER

If you tend to keep a large balance in your current account, the Santander 123 current account could be the deal for you. This is because it pays a tiered rate of interest on balances up to £20,000.

You’ll earn 1.00% AER on balances up to £1,000, 2.00% on balances of up to £3,000 and the top rate of 3.00% on balances between £3,000 and £20,000.

Additional benefits: You’ll also earn cashback of between 1.00% and 3.00% on some of the direct debits that leave your account, ranging from your water bill to your Santander mortgage.

Need to know: You will need to pay £500 or more in to your account each month and there’s a £2 monthly fee. You’ll also have to set up at least two direct debits.

TSB Plus account

BEST FOR: Balances of around £2,000 and those who don’t want to switch again

Pays: 5.00% AER

If you carry a credit balance of around £2,000 in your account and are not an avid ‘switcher’, the TSB Plus account, which was launched today, could be right up your street.

It pays a healthy flat rate of 5.00% AER on balances up to £2,000. But unlike some of the rival accounts mentioned further down this article, this rate is ongoing so it’s great if you are looking for an account with long-term value.

Need to know: You must pay £500 or more in to the account each month.

Nationwide FlexDirect account

BEST FOR: Balances of up to £2,500

Pays: 5.00% AER for 12 months

An alternative for current account balances of around the £2,000 mark is Nationwide FlexDirect current account. This deal pays 5.00% on balances from £1 to £2,500. However, the rate only applies for the first 12 months after which time it falls to 1.00%.

Additional benefits: You’ll have exclusive access to a number of products such as the Nationwide Flexclusive ISA paying 1.75%.

Need to know: You must pay at least £1,000 in to the account each month

Club Lloyds current account

BEST FOR: Balances of between £4,000 and £5,000

Pays: Up to 4.00% AER

For those with a slightly higher balance, but not as high as Santander’s £20,000 upper limit, the Club Lloyds current account – also launched today – could be a good bet.

Like Santander, it pays a tiered rate of interest. On balances between £1 to £1,999.99 you’ll earn 1.00%; between £2,000 and £3,999.99 you’ll earn 2.00%, while the top 4.00% rate is reserved for balances between £4,000 and £5,000. No interest is paid on balances over £5,000.

Additional benefits: The Club Lloyds account will also give you exclusive access to a monthly saver account which pays 4.00% and requires you to pay in between £25 and £400 a month – and you can access your money when you want. And if you have a mortgage with Lloyds Bank, you’ll also get a rate reduction of 0.20% on the deal you choose.

What’s more, you’ll be able to choose from one of the following freebies each year: Six Vue Cinema tickets, an annual magazine subscription (for magazines such as Men’s Health, Esquire, Company and Cosmopolitan), or an annual Gourmet Society membership, offering discounts at a range of restaurants.

Plus, you’ll be able to take advantage of Lloyds’ ‘Everyday Offers’ which allows you to earn up to 15% cashback at selected retailers. You’ll just need to choose which deals you’re interested in when you log on to your account.

Need to know: You will need to pay in £1,500 a month – triple that required by TS – and set up two direct debits or otherwise pay a £5 monthly fee.

Clydesdale Bank Current Account Direct

BEST FOR: Balances of under £3,000; those who have already opened Nationwide FlexDirect – and anyone who can move quickly 

Pays: 4.00% until March 31, 2015

If you opened the Nationwide FlexDirect current account a year ago, the rate on your account will be about to drop to 1.00% so it’s time to move your money elsewhere. A good option is the Clydesdale Bank Current Account Direct as this 4.00% (but 3.83% AER) on balances up to £3,000 until March 31 2015. After this date the rate drops to 2.00%.

Need to know: You must pay £1,000 or more in to the account each month. 

Need an overdraft?

If you don’t always stay in credit and have a tendency to dip into the red, there are a number of current accounts that offer interest and fee-free overdrafts – you can compare them here. However, some of the accounts mentioned above are also still worth considering.

  • The Club Lloyds current account offers a £100 interest-free overdraft.
  • The Santander 123 current account offers a fee-free overdraft for four months – after that, you’ll be charged £1 per day, capped at 20 days a month.
  • The Nationwide FlexDirect account offers an interest-free overdraft for 12 months – after that, you’ll pay 50p per day on overdrafts over £10.
  • The Clydesdale Bank Current Account Direct doesn’t offer an interest-free overdraft, but it does offer a competitive rate of 9.9% EAR.

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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