Bank accounts come in all sorts of different forms. There are some that are particularly good for people that are at risk of overspending, as they have fee-free or interest-free overdrafts, while others reward users with all sorts of additional benefits, like travel insurance, in exchange for a monthly fee.
But if you have a healthy credit balance each month, chances are you are going to want to find an account that rewards you with a decent rate of interest on that balance. So which accounts currently pay the best rates of interest and are worth considering?
The FlexDirect Account from Nationwide offers a massive 5% AER on balances of up to £2,500, a much healthier return than you will find from most savings accounts let alone rival bank accounts.
It’s even a decent option if you occasionally drop into the red too, as it comes with a fee-free overdraft for a year as well.
There are a couple of hurdles to bear in mind though. For starters, that 5% rate is only available for the first 12 months that you have the account. After that it drops down to 1%. What’s more, there’s no interest at all paid on balances above £2,500.
In addition, you will need to pay in £1,000 each and every month into the account in order to get that 5% rate.
TSB Classic Plus
The Classic Plus account from TSB also pays a rate of 5%, though TSB isn’t quite as generous as Nationwide, with the rate restricted to balances of up to £1,500 only.
Account holders can also benefit from an optional £35 interest and fee-free overdraft.
In order to get the full 5% interest, you’ll need to pay in a minimum of £500 each month, as well as register for internet banking, paperless statements and correspondence.
Lloyds Bank Club Lloyds
Lloyds Bank offers the Club Lloyds account, which rewards users with an interest rate of 1.5% on balances of up to £5,000, so it’s a decent option if you have quite a lot of cash in your account.
You need to pay in £1,500 a month in order to benefit from the account, otherwise you’ll be charged a £3 monthly fee.
Club Lloyds comes with a handful of other benefits for account holders, which include the option of picking one ‘lifestyle benefit’ each year. At the moment these benefits range from cinema tickets to magazine subscriptions.
Bank of Scotland Classic Account with Vantage
Vantage is an add-on to current accounts offered by the Bank of Scotland, which means that account holders enjoy a return of 1.5% on balances of up to £1,500.
In order to qualify you will need to pay in £1,000 to the account each month, and stay in credit throughout.
The Santander 123 account delivers a 1.5% interest rate on balances of up to a whopping £20,000. There’s no time limit on that interest rate either, so you might want to consider it as an alternative to a traditional savings account.
There’s an added benefit to the 123 account, in that you earn cashback on certain household bills that you pay by direct debit.
Account holders get 1% cashback on water bills, council tax and the first £1,000 paid on Santander mortgage payments, 2% on gas and electricity bills as well as Santander insurance policies, and 3% cashback on mobile and home phone bills, broadband and paid-for TV policies.
In order to qualify you will need to pay in £500 a month, while there is also a £5 monthly fee to take into account.