8th September 2015
The level of ‘in-credit’ interest paid on a bank account is the biggest driver of switches according to research by MoneySuperMarket.
Based on analysis of what it is customers look for when choosing a new account found just over two-fifths of consumers (41 per cent) are looking for high in-credit interest. This is a significant rise from last year, when the same analysis revealed 27 per cent of site visitors were keen on interest rates when looking to switch their account.
MoneySuperMarket says that consumers could earn over three times more interest with one of the top paying current accounts compared with the top easy access savings account.
Both Nationwide and TSB offer current accounts with in-credit interest rates of five per cent, whereas the leading easy access account from Kent Reliance Building Society pays just 1.65 per cent AER. Nationwide’s FlexDirect account currently offers five per cent AER on balances up to £2,500, while TSB Classic Plus Account also offers the same rate on balances up to £2,000. Alternatively, Santander’s 123 account pays 3.00 per cent AER on balances between £3,000 and £20,000 making it a good option for anyone with a larger savings pot.
More reasons to switch
The research shows that (20 per cent) want an account which offers a cash bonus upfront for switching, and another 20 per cent are enticed by the benefits and rewards they could receive. Fourteen per cent are pulled towards a current account for the overdraft facility on offer, and five per cent consider switching due to customer service.
Those who believe cashback is king could earn as much as £150 by switching their account to First Direct** or Clydesdale and Yorkshire Bank. Meanwhile consumers who move to Halifax’s Reward Current Account would receive £125 cashback when using its dedicated switching service and benefit from up to 15 per cent cashback when using their debit card with selected retailers.
Kevin Mountford, head of banking at MoneySuperMarket, says: “The importance of high in-credit interest rates has soared, which isn’t a surprise as the interest available on easy access savings accounts remains so low. The introduction of the Current Account Switch Service has definitely driven banks to be more innovative and keen to offer attractive incentives resulting in a market rife with competition. The service has also motivated consumers to seek out accounts that suit their needs and boosted peoples’ confidence to move to a new bank given the ease they can do this now the service is in place.”
Best for in-credit
|Provider||AER||Minimum Monthly Funding||Benefits (other benefits may be available)|
|Halifax Reward Current Account||£5 per month||£750||£125 cashback when using switching service Up to 15% cashback when debit card is used with selected retailers.|
|Nationwide FlexDirect||5% up to £2,500||£1,000||Flexclusive product offers and rewards|
|TSB Classic Plus Account||5% up to £2,000||£500||N/A|
|Lloyds Bank Club Lloyds Current Account||
|Santander 123 Current Account||1% on balances over £1,000 2% on balances over £2,000 3% on balances over £3,000||£500 + £2 per month fee||1% cashback on water and council tax bills and the first £1,000 paid towards a Santander residential mortgage payment 2% cashback on gas and electricity bills 3% cashback on mobile and home phone bills, broadband and paid for TV packages.|
Sourced MoneySuperMarket 02.09.2015
Best for overdrafts
|Provider||Overdraft Rate (EAR)||Unauthorised EAR||Minimum Monthly Funding|
|Nationwide FlexDirect||0% for 12 months||50p per day up to £10 £5 per day over £10 Fees capped at £60 per month||£1,000|
|Santander 123 Current Account||0% for 4 months||£6 per day||£500 + £2 per month fee|
|Santander Everyday Current Account||0% for 4 months||£6 per day||£0|
|Nationwide FlexPlus||0% for 3 months||50p per day up to £10 £5 per day over £10 Fees capped at £50 per month||£10 per month|
|First Direct 1st Account||£250 interest free 15.9% thereafter||15.9% + £5 each day your account is informally overdrawn up to a max of £80||£1,000|