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credit interest on your current account, is worth it on a small credit balance?
Published: 04/06/2009 |
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Andrew Hagger at Moneynet.co.uk looks at credit interest rates on current accounts and whether it’s worth switching accounts to take advantage. As things stand, the Santander brands of Abbey and Alliance & Leicester offer the highest return on current account balances with both paying 5% AER on the first £2500 for the first 12 months. The maximum benefit you could get at this rate is £100 for the year (net of 20% tax). However for people who always remain in the black but only keep a small credit balance in their current account, then the Reward Current account from Halifax wins hands down. As long as you pay in a minimum of £1000 each month, you’ll receive a net monthly payment of £5 each month (£60 per year) irrespective of your balance. To illustrate this further, if you only keep an average credit balance of say £500 in your account over a year, you’d need to find a credit interest rate of 15% in order to accrue a net annual interest payment of £60. The other plus point with The Halifax option is that it’s not just a one year introductory offer, although there is nothing to stop it being pulled at sometime in the future. In fact if your average credit balance is £1500 or less then the Halifax comes out on top, however be aware that any overdrafts on this account are charged at £1 per day (up to £2500), so if you tend to dip into the red from time to time then it’s not such a good deal. Apart from the Halifax, Abbey & A&L accounts, nobody else comes close. Lloyds TSB pay 2.5% on the first £2,500 with the rest of the providers in the market barely worth mentioning. ENDS |
