What’s the deal?
Clydesdale bank’s Current Account Direct pays an annual equivalent rate (AER) of 4.00% fixed until March 31, 2015 on balances up to £3,000. It will pay 2.00% after this date.
Those who dip into the red will have to pay interest on their overdraft, but at a relatively low rate of 9.9% EAR.
The account can be managed over the phone, online or through the Clydesdale’s newly-launched mobile banking app, though you can also use your local branch for transactions such as paying in cash.
Andrew Pearce, retail director for Clydesdale and Yorkshire Banks, said: “We’ve spoken to thousands of people, and one thing that came out clearly was that they wanted a simple, straightforward way of earning interest on the money in their bank account. Current Account Direct gives them that.”
Who’s it good for?
Current Account Direct is a great account for anyone who has a savings pot of up to £3,000 and is looking to earn a decent rate of interest on it.
It’s also a good choice for those who have money left in their account at the end of the month but frequently forget to move that cash into a savings account.
One catch to be aware of is that you’ll need to pay £1,000 or more per month into the Current Account Direct in order to qualify for the 4.00% interest. This excludes internal transfers.
And, while the 4.00% rate is extremely competitive, remember it only applies on balances up to £3,000 – anything over this receives no interest at all. Plus, after March 31, 2015, the rate falls to 2.00%.
The 4.00% rate can also be beaten by Nationwide’s FlexDirect account which pays an AER of 5.00%. However, the 5.00% rate only applies to balances up to £2,500 (so £500 less), and after 12 months, the rate falls to 1.00%. You’ll also have to pay in £1,000 or more a month.
But the Nationwide FlexDirect account is more generous to those who use their overdraft, offering a fee-free overdraft for 12 months. After this, a daily usage fee of 50p per day applies.
What’s the verdict?
Overall, Clydesdale (and Yorkshire’s) Current Account Direct is a very competitive deal and is likely to appeal to those who are fed up with receiving poor interest rates on their savings. Although the 4.00% rate can be beaten by Nationwide’s FlexDirect account, remember that the Yorkshire and Clydesdale offerings have a longer fixed term and the rate they revert to after that time is higher at 2.00%.
It’s worth noting, though, that if you have a larger savings pot, or tend to keep a larger sum of money in your current account, then Santander’s 123 account pays interest on balances up to £20,000 – albeit at a slightly lower rate. Rates are tiered, so you’ll earn 1.00% on balances over £1,000, 2.00% on balances over £2,000 and 3.00% on balances between £3,000 and £20,000.
Santander’s account also allows you to earn cashback of between 1.00% and 3.00% on your household bills, providing they are paid by direct debit. However, you will need to pay £500 or more into the account each month and pay a £2 monthly fee. It also offers a four-month fee-free overdraft.
Another option is the Halifax Reward current account. This pays a straightforward £5 every month you pay in £750 or more and pay out at least two direct debits, and stay in credit. You will also receive £100 if you switch to this account.
Thanks to the 7-Day Switch rules introduced in September 2013, you can now switch current accounts in seven working days. So there’s really no excuse not to get moving! Head over to our current accounts channel to compare your options.