These 6 current accounts will give you a better rate on your savings

If you’re a saver trying to make your money work as hard as possible, you’ve had your work cut out for you lately. But did you know you can earn more on your cash if you don’t hold it in a savings account?

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Yes, things are pretty bad out there for savers. In fact, the financial watchdog took a look at the savings market recently and found that in some cases, interest rates on savings accounts were LESS than 0.5% (the current level of interest rates), and yet four out of every five easy access savers have stuck with their dismal returns for three years, regardless.

If you're a saver, you probably already know how bad rates have gotten (although a poll we ran earlier this month did find more than a third of us (34%) aren’t absolutely sure how much our savings earn).

What you need is solutions. And what you might not have considered yet is current accounts.

These days some current accounts will give you a much better rate on your savings than an easy access savings account. And, as you can take cash in and out whenever you like, they aren’t that different to use.

The rub however, is that to get these great rates, you will need to use the current account as your 'main account' and this means paying in a minimum every month and/or setting up direct debits out of the account to cover bills. (And remember – your annual £15,000 ISA allowance should always be your first port of call as you will earn the interest tax-free).

Here are the current accounts that will top your savings rates:

Earn 5%

The following accounts pay more than three times the interest of the best easy access savings accounts.

Account: TSB Classic Plus account
In credit rate: 5%
Applies to: Balances of up to £2,000
Operation rules: £500 a month minimum deposit
What to note: You must sign up for internet banking/paperless billing

Account: Nationwide FlexDirect
In credit rate: 5% for 12 months, 1% after that
Applies to: Balances between £1 and £2,500
Operation rules: £1,000 a month minimum deposit
What to note: The 5% only applies for a year

now is the time for savers to change tack…

Earn 4%

This account more than double what the best easy access savings accounts can muster.

Account: Club Lloyds Current Account
In credit rate: 4%
Applies to: Balances between £4,000 and £5,000
Operation rules: £1,500 a month minimum deposit, or else a £5 monthly fee
What to note: You must pay out two separate direct debits from the account each month

Earn 3%

At 3%, this account still pays more than twice what you can expect from the leading easy access savings account.

Account: Santander 123 Current Account
In credit rate: 3%
Applies to: Balances between £3,000 and £20,000
Operation rules: £500 a month minimum deposit and a £2 monthly fee
What to note: You must pay out two separate direct debits from the account each month

Earn 2%

Even at 2% these current accounts out-perform the leading easy access savings account rate.

Account: Clydesdale Bank Current Account Direct / Yorkshire Bank Current Account Direct
In credit rate: 2%
Applies to: Balances between £1 and £3,000
Operation rules: £1,000 a month minimum deposit. Account must be opened in-branch or by phone
What to note: You must register for automated telephone/online banking 

Cash rewards

Even if the rate of interest on a current account doesn’t beat that of your savings account, it might offer a cash reward for switching that eclipses what you’d earn from your savings in a year.

The Halifax Reward Current Account, which doesn’t pay interest on credit balances, offers £125 when you switch.

Similarly, First Direct’s 1st Account pays no interest on credit balances, but does offer £100 for switching and another £100 if you’re unhappy enough to leave the account within 12 months – as long as you’ve held the account for at least six months and paid in at least £1,000 each month.

If you're an M&S shopper, you might also be interested in the exclusive £125 gift card on offer when you switch to its current account via MoneySuperMarket. You can only spend it at M&S stores, but in terms of its value it's just as good as the cash incentive on offer at Halifax. Act fast, though, as the M&S deal will disappear after March 31.

Top tip

It's really important to keep an eye on your current account's rate of interest, because it can change. For example, the lucky customers who managed to sign up for the Clydesdale current account when they could get a rate of 4% will see their rate drop to 2% from March 31. And now that switching to a new current account takes just seven days, there's no excuse not to move to one of the more lucrative deals higher up this page.

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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