Best bank accounts: Top current accounts for interest and rewards

Release time：2024-04-30 10:44:50 Source：Earthly Encounters news portal

Our bank account is the financial product that we use more frequently than any other, but many people rarely make sure theirs works for them.

Yet, different current accounts suit different people, with options ranging from those that pay interest, to ones that offer cheaper spending abroad, have good apps and budgeting tools, a better overdraft rate or package in extras, such as insurance.

Two banks are offering cash simply for switching. First Direct is paying £175 and TSB is offering customers £125 for switching. 

Some banks are now offering very competitive linked savings rates. Digital banks, Monzo and Chase both pay 4.1 per cent for linked instant access savings, for example.

Banks such as Barclays, HSBC and Santander also grant access to exclusive easy-access savings rates which pay even higher. 

If you're unhappy with your current bank or spot a better deal elsewhere, it may well be worth considering a switch. You can find our picks of the best accounts below.   

1. Best account for in-credit interest: Nationwide

Current account in-credit interest has dwindled in recent years, with many banking providers offering little to no interest to customers.

However, Nationwide has an introductory credit interest rate on its FlexDirect current account paying 5 per cent.

The special rate will be available for new applications on balances up to £1,500 for the first 12 months.

It means someone keeping at least £1,500 in the account could earn £75 in interest over the course of one year.

The current account king: Nationwide attracted almost 150,000 customers via the switching service in the final three months of last year by dangling incentives.

Watch out

Unfortunately, anyone who has previously held a FlexDirect account will not be eligible for the new rate.

However, if applicants have previously held a sole account only, they would be eligible for the introductory rate on a joint account and vice versa.

To qualify, switches must be made from another provider using the Current Account Switching Service (CASS) and a minimum of two active Direct Debits must be transferred as part of the switch and set up on the new account. CASS will do this automatically for you.

To benefit from the in-credit interest, holders must pay in a minimum of £1,000 each month.

On the last day of every month Nationwide will calculate the interest earned each day and then pay this interest on the first day of the next month.

Nationwide is the most generous when it comes to in-credit interest - albeit only on balances up to £1,500 and for one year only.

However, if the monthly income being deposited into the account drops below £1,000, you won't receive any interest that month.

The 5 per cent rate ends after one year. Thereafter it drops to just 1 per cent. So it may be worth looking elsewhere after the 12 months for a better return on your money.

Verdict

For those who have bigger amounts of cash in their bank account, it could be worth considering new digital bank, Kroo which is currently paying 4.1 per cent on balances up to £85k. Kroo is also increasing the rate to 4.35 per cent from 1 August.

However, the interest rate is not the only reason for switching a current account.

Online and mobile banking offerings and better customer service are often cited as the main reasons behind people switching current accounts.

Overdraft limits, cashback and other niche lifestyle benefits are all factors that count for something as well. 

Ultimately, however, if cold hard cash is all you’re after, the £200 switching perks currently being offered by NatWest, RBS and TSB may be more appealing.

Furthermore, for those that choose Nationwide, you may find yourself needing to switch again in a year when that in-credit interest plummets to a measily 1 per cent.

What about overdraft rates? 

Previously, This is Money offered a guide to the best bank accounts for overdraft borrowers. 

Unfortunately, that guide is somewhat moot after almost all of Britain's biggest banks hiked the cost of borrowing to nearly 40 per cent APR, more than double the cost of the average credit card. 

This was in response to a crackdown on the cost of unarranged borrowing and the transparency of overdraft rates, which were often priced using daily fees which quickly added up.

Sadly, this means there isn't a great deal of savings to be made, with almost all banks charging upwards of 35 per cent and HSBC, Lloyds, NatWest, Nationwide Building Society and Santander all charging 39.9 per cent. 

Instead, the best bet is to avoid being charged these fees in the first place, by using a fee-free buffer if it's available. The best buffer is offered by HSBC offshoot First Direct, and offers £250 fee-free overdraft.

2. Best account for interest on a larger balance: Barclays Blue Rewards

Barclays banking customers who sign up to its Blue Rewards scheme will be able to benefit from an exclusive easy-access savings deal. 

The Barclays Rainy Day Saver account pays 5.12 per cent interest on balances up to £5,000.

The account can be opened with as little as £1. 

Anything over £5,000 will only earn 1 per cent, so it won't be worth having anything above that in this account.

Someone stashing away £5,000 in the Rainy Day Saver will earn more than £250 in interest after one year.

Watch out

To benefit, savers will need to be a Barclays Blue Rewards members, which means opening a Barclays bank account in order to apply online.

Barclays Blue Rewards is a way to collect rewards, including up to £5 a month for having two direct debits paid out of a Barclays current account.

However, there are a few catches, including a £5 monthly membership fee and a commitment to pay at least £800 into the account each month.

Our verdict

Even with the £5 monthly charge nobody will argue that 5.12 per cent for what is essentially an easy-access deal is very good.

The best easy-access deal on our independent best buy tables pays just over 5.2 per cent. 

The £5 monthly fee for Blue Rewards can be nullified by the £5 rewards you'll recieve by setting up two direct debits going out of your account and paying in at least £800 each month. 

Of course the balance cap of £5k will mean this may not be for everyone, but for anyone with a spare £5k that they want to keep close, switching to Barclays to take advantage could well be worthwhile.

3. Best account for cash signing up bribe: NatWest

Nationwide is offering new customers a whopping £200 in cash just to switch.

Anyone switching their main account to a NatWest current account will be eligible.

They need to pay in at least £1,250 to the account and log in to NatWest's mobile app within 60 days.

The deposit of £1,250 does not have to be in one lump sum and can be made up of multiple payments. It must remain in the account for 24 hours.

When they meet these conditions NatWest will pay £200 into the new account within seven days. 

Money spinner: NatWest is offering £200 to new joiners - the joint biggest of all cash incentives.

Watch out:

It's worth noting that anyone who has previously received a switcher incentive from NatWest Group since 1 January 2020 will not be eleibible for the offer.   

That includes people who have opened a NatWest or RBS current account on or after 1 January 2020.

Verdict: 

In terms of cold hard cash, NatWest's offer looks great in terms of the amount on offer. Santander and Club Lloyds are the only other banks paying a switching bonus and these are a lesser £185 and £175 respectively.

There are less hoops for customers to jump through to get NatWest's switching bonus and the cash will arrive within a speedy 7 days of the current account switch being completed.  

4. Best account for cashback: Santander 

For those looking for a bank with a decent cashback offering Santander may be your best bet.

Its new Santander Edge Up account is also offering cashback on both debit card spending and direct debits, with up to £30 per month available, although there is a £5 monthly account charge. 

The new bank account has effectively replaced Santander's 123 current account, which has now been removed from sale. 

However, existing 123 customers can continue to use their account as usual. 

It's also worth pointing out that Santander's new account pays 3.5 per cent interest on balances up to £25,000.

This means someone maintaining the maximum balance will earn £875 in interest over the course of one year - before factoring in its £5 a month fee (see below).

Santander has unveiled its Edge Up account, which it claims offers customers the ability to earn over £100 a month in total with up to £30 in cashback and up to £71.72 in interest.

How it works 

There is 1 per cent cashback on essential grocery shopping and transport-based debit card spending. This is capped at £15 a month.

There is a further 1 per cent cashback on household bills paid via direct debit covering council tax, gas and electricity, mobile, landline, broadband and paid-for TV packages. Once again, this is capped at £15 a month.

While the cashback sounds generous, in reality the majority of customers won't get anywhere near the potential £30 a month.

To receive £30 monthly cashback they would need to spend at least £1,500 a month on eligible essential debit card spend and at least £1,500 a month on eligible monthly bills paid by direct debit.

Watch out

For all its benefits, there are some hoops and charges for any would-be customers to be aware of.

First and foremost, it comes with a £5 monthly charge, which will add up to £60 each year.

Customers must also pay in a minimum of £1,500 a month and set up two direct debits from the account.

Verdict

Despite the £5 monthly fee, we really like this card. The cashback and the 3.5 per cent interest rate makes it hard to beat in both those catergories.

Plus unlike a number of the big high street banks, its debit card is fee free when being used aboard including no Santander charges when using ATM's overseas.

However, customers would be wise to check their monthly outgoings to check what cashback they will likely be on track to receive. 

5. Best digital bank: Chase

Chase is part of US financial giant JP Morgan, and launched in Britain in September 2021.

Since launching, Chase has already hoovered up more than 1.6 million customers, and holds £15 billion in UK savings.

Ealier this year it announced it had also joined the Current Account Switch Service (CASS).

In terms of standout perks and features it's hard to find another bank that comes close to matching it. 

It offers 1 cent cashback on card spending for 12 months (capped at £15 a month), which can be extended for a further year if you deposit £500 a month into the account.

It has also introduced 1 per cent in-credit interest for money held on account.

It offers a linked instant-access savings account paying 3.8 per cent and regular saver round up function that automatically saves spare change and pays 5 per cent interest.

There are also no charges for using the Chase debit card abroad.

Chasing customers: Chase has attracted more than 1.6 million UK customers since it launched in September 2021.

Watch out: 

Chase doesn't have any branches, which might cause an issue for some customers who want face-to-face banking, or at the very least want to speak to someone on the phone.

It is also worth noting you will need a relatively new smartphone to run the account.

Your smartphone will need to run iOS 14 and above, or have access to Google Play on Android 8.1 and above, which means some devices are not supported due to hardware limitations.

The bank also does not currently offer joint accounts, so it will not necessarily work for everyone.

Chase does not allow overdrafts, so the limit on the payments you can make is the amount you hold in your account. 

Our verdict:

Chase has clearly got off to a good start in the UK, attracting a continual flow of new customers within a very short space of time.

The customers themselves seem happy enough. The Chase banking app is rated 4.9 out of 5 on the Apple apps store and 4.2 out of 5 on the Google Play store.

Some Britons may not be ready to fully embrace digital banking, but with fee-free overseas spending and ATM withdrawals, perhaps they should consider trying it for their holiday spending.

Equally with a 3.8 per cent linked instant-access account, it could be a great secondary bank account to store savings - particularly when many of the big banks are paying low rates. 

• Reward Current Account | Royal Bank of Scotland
• Open a NatWest Reward Current Account | NatWest Bank Accounts
• Reward Bank Account | Royal Bank of Scotland - RBS

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