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Earn 60 Times More Current Account Interest!

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Published in Current Accounts on 11 June 2008

And it's not just for new customers either. Find out more here...

Lloyds TSB, Britain's biggest current account provider, turned up the heat in the current account market this week, raising the interest rate on its ‘Plus' account range from 4% to 6% AER.

The bank is offering the rate to all new accounts opened before 13th July 2008 - and in a rare move in today's banking world, to existing customers also (hooray!).

So, if you're currently an existing ‘Classic account' customer earning 0.1% interest on your current account, you could earn 60 times more interest -- as long as you pay in at least £1,000 per month.

Unfortunately, life for existing customers is never easy, and you will need to contact Lloyds TSB to request the higher interest rate. You can do this via internet banking, in-branch, or over the phone (ask to be put through to the ‘Added Value Accounts' department, who will do this for you).

Battle Of The Current Accounts

This is only one of the latest moves by a bank attempting to reel in deposits from new customers.

The current account market has been notoriously hard to conquer, with research by both Smile and Age Concern finding that Brits are more likely to get divorced than switch their bank account.

However, now couldn't be a better time if you're looking to switch, with several banks falling over themselves in an attempt to win your business.

Here are the top paying current accounts at the moment, together with what they offer:

Company

Account

Funding Requirement (monthly)

Credit Interest AER

Alliance and Leicester

Premier Direct

£500

8.5%

Abbey

Abbey Current Account (in-credit option)

£1,000

8%

Lloyds TSB

Classic Plus

£1,000

6%

Coventry Building Society

First Account

£1,000

5.6%

Halifax

High Interest Current Account

£1,000

5.12%

*Interest rates apply to the first £2,500 (otherwise 0.1%) on all accounts apart from the Coventry First account, for which the upper limit is £250,000.

As you can see, Lloyds TSB are not the only bank trying to reel you in with a great rate. Alliance and Leicester's Premier Direct account pays a market leading 8.5% credit interest on balances up to £2,500.

If you prefer perks to profit, A&L's 'Premier' account only pays 1% credit interest, but comes packaged with free European travel insurance. You can also take advantage of its exclusive Premier Regular Saver, paying 12%.

Abbey also has a headline grabbing account which pays 8% credit interest for the first 12 months. However, as several Fools pointed out below my last article, its customer service still leaves a lot to be desired.

One bank which came out trumps among the comments wasn't even a bank at all! Coventry Building Society was praised for its good service, with its current account paying an in-credit interest rate of 5.6% AER for the first year.

In addition, unlike many other table topping rates, Coventry doesn't have an upper limit on qualifying credit balances (well, £250,000, but how many of us have that lying around in our current accounts?). In addition, you'll continue to earn a high rate, currently 4.75% AER, after the initial 12 months has elapsed.

A £100 Welcome Bonus

It's not just interest rates the banks are trying to lure you in with. Widely-praised First Direct will hand you £100 if you switch your current account to them. What's more, the bank is so confident you'll like their service that they'll give you another £100 if you decide to leave them after six months.

Bear in mind that you'll need a monthly salary of at least £1,500 to qualify, and unlike its competitors, the account doesn't pay any credit interest. Still, the bank provides a sweep facility which can automatically move funds into a higher interest savings account if required.

So, whatever you look for in a current account, be sure to take advantage of the great deals available at the moment. After all, convenience may be one thing, but if you're getting a raw deal from your bank, then perhaps it really is time to switch...

More: Bank Charges Have NOT Got Cheaper

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Comments

The opinions expressed here are those of the individual writers and are not representative of The Motley Fool. If you spot any comments that are unsuitable hit the flag to alert our moderators.

FoolLandlord 13 Jun 2008, 5:35am

Having been with Abbey, Barlays and HSBC, I would have to say First Direct comes up top of the list on customer service. Personally, I find it more beneficial over rates to have a 24 hour UK telephone banking. FD rates are good, but what I find dissappointing is how rates change each quarter. I mean, what other bank will open a savings account for you at 2 in the morning?! Having used internationlal banking whilst travellling abroad, the next time I called when in the UK, they even asked how my holiday went with a genuine interest. Been with them for 3 years now, and I'm not likely to switch, probably more likley to divorce (which is absoloutley unlikely).

paul30661 13 Jun 2008, 9:09am

As an existing Lloyds customer and having read earlier that you need to call to get the higher interest, (you can't do it on-line) when I called Lloyds on Monday I was told by a very snotty 'customer services' lady that it would be done automatically. Now I don't whether it has been done or not - so will go to the branch.
Shame - Lloyds is a good bank with good products and good branch staff, but let down by non-customer facing 'customer services' and not being fair with new product features to existing customers

Jandbump 13 Jun 2008, 9:20am

Alliance & Leicester - forget the headline rates, customer service is appalling, both at bank, on line and telephone. Not to mention incorrect charges at huge rates which are easier to accept then get corrected.... As a result we switched joint bank account but have been trying to close A&L for SIX MONTHS !!! (despite repeated complaints still no action)

Jandbump 13 Jun 2008, 9:28am

PS - Yorkshire Building Society has internet saving account with optional card paying 5.7% interest, no minimum monthly deposit and great customer service. Regular saver is one of the best too.

davebird4691 13 Jun 2008, 9:39am

Can't fault the Halifax High Interest Current Account. Easy to set up and manage online, pretty good customer service, decent credit interest rate and they gave me £100 to join them!

TMFSUZY 13 Jun 2008, 9:48am

Hi paul30661,

Just to clarify a couple of things. If you are an existing 'Classic' customer (not Plus already) you should be able to upgrade online. If you log into internet banking, there is a button on the left hand side which says 'upgrade your account', and you should be able to do it that way (well, that's how I did it) Simply choose the 'Plus' option.

If, however, you are already a 'Plus' customer, then you will have to speak to someone to make the change for you. Hmmmm, Paul I also doubt that your account has actually been upgraded. When I tested customer services, three of the people I spoke to didn't even know the 6% offer existed! So they immediately forwarded me to a sales team who tried to sell me everything under the sun. However, I finally got through to the Added Value Accounts dept., which did the upgrade for me. You should be able to tell if the account has been upgraded when you next log on to internet banking -- as there should be an error code when you click the 'upgrade your account' button mentioned above.

I know it's a very long-winded way of doing things, but personally I applaud Lloyds for offering this to existing customers. After all, in a world where it's 'Brand new customers only', offers like this are becoming few and far between...

Hope that clarifies things a teeny bit!

Szu

ampers 13 Jun 2008, 10:34am

I am still a little uncertain. I am hesitant with building societies. I bank with Citibank because they don't charge me a penny if I go overdrawn each month for up to £500, in fees or interest, just as long as I zero my account the following month. Not that I take advantage, have only dipped into it twice in eight years - but no angry letters and although only 2% this is a big plus for me.

My savings are now in Ing, I am not happy with US or UK banks or savings (building) societies because all of them are tied up in mortages.

Ing is a Dutch bank but I am looking to putting my savings further afield (Outside of Europe and America, and am looking at places in the far east including Australia and New Zealand.

It would be very useful of Motley could investigate Eastern safe areas for us.

I am not talking about "big bucks" here, just my savings for my old age.

Ampers (69).

ayesha760 13 Jun 2008, 11:52am

Alliance and leicesters customer service is beyond appaling an I would advise everyone to steer clear of them.My father was a customer of theirs untill he was diagnosed with mesothaelioma ( a terminal cancer caused by asbestos) The docs told him to sort out his affairs quickly so as a+l have shut our local branch he went into barclays and spent 2 hours with them to sort out closing all his other accounts and just have one current in barclays in joint names with my sis.The resulting harrassment from a+l was astonishing they just kept ringing and writing to him asking him to call them but when he did they didnt know why they wanted to speak to him.3 months later and he has now passed away yes a+l did shut his account but are still holding all his money and still havent given an explanaion as to why.We had to complain to the ombudsman (in fact the last signature ever by my father is on the complaint form)They are an absolutely disgusting bank that truly should be avoided.

Theatreman 13 Jun 2008, 1:42pm

Lloyds have also just increased their bank charges for their Gold account from £10 to £12 so given that my current account never has any significant funds in it at the end of the month this seems like a ruse to divert attention to banks further attention to take yet more money from us to clear up their shoddy investment strategies

anonymity 13 Jun 2008, 11:19pm

Re Theatreman. The charge increase relates to the improvements in the benefits package you get with the Gold account, and this should have been sent out through the post to you in February. If not then I recommend going into your local branch where the changes will be explained, they will see if this is still the best account for you and they can upgrade you to Plus at the same time!

scot82 14 Jun 2008, 8:05pm

I've had, and been happy with, a First Direct Current account for about 5 years now. Their customer service has always been good and they have a simple online banking facility which is ideal for my needs.

Recently though, my concerns have been raised about their security protocols through a personal experience. A Direct debit instruction, which was set up several years ago (albeit rarely used), was declined by First Direct as they deemed it an invalid instruction. I didn't find out about this until a few weeks later from the other company rather than through my own bank. I would have expected that if an attempt at a transaction was made on my account that they deemed invalid, surely they should have some responsibility to make their own customer aware of this? I don't know, maybe my expectations are too high but that doesn't sit too well with me.

cmth 15 Jun 2008, 9:29pm

help! where can I find info on high-interest-rate savings accounts for non UK-residents. Have a bank account in UK still open - but opening a new account requires me to state my UK address. only address I have is my mum´s. Any advice how to find high-interest accounts for non-residents?

acecamper 16 Jun 2008, 7:34am

Szu,
I have been critical of MFOOL in my last note for a poor article, but, thanks for pointing this out. I am an existing LTSB customer who changed the minute I read you piece with no probs.

1Dee 16 Jun 2008, 9:05pm

Referring to Davebird4691 re Halifax. I was a very satisified customer of Halifax for years. Using my overdraft facility regularly but never going "unauthorised". I hit upon a bad period a few years ago which was outside of my control. As soon as this happened Halifax changed completely towards me. I did get into debt with them but kept them informed all the way. This didn't help, they were so unhelpful and unsympathetic towards my plight that I had my salary placed into another account immediately (NatWest). Nearly three years on and there as still some loose ends to tie up with Halifax and I am still getting "robots" to speak to. Even when you get through to a human being they don't seem to listen. If your problem doesn't fall within their remit of "standard problems" they go into remote control and every single person I have had the misfortune to speak to in this regard spews out the same old rantings not taking into account anything I say!!! I have now given up running up my telephone bill and will tie up these loose ends when it suits me!!!

Benchimus 19 Jun 2008, 10:14am

I have had both First Direct and Smile accounts.

I have to agree that being able to check your account at any time (and with somebody who doesn't sound like you're interrupting their day!) was a great feature with First Direct. However, the main reason I opened an account with Smile was the interest on the current account (at the time, one of the better ones, now I note with bemusement how a number of the major retail banks offer high interest current accounts...) and their ethical commitments.

High interest payments on current account balances are enticing, but it is worth noting the quality of service (both First Direct and Smile have been excellent) above the financial reward. And of course, you need to be sure you're depositing the minimum, otherwise you'll lose the perk.

sssonick 20 Jun 2008, 10:31am

I have a Lloyds TSB Select account, when I attempted to upgrade to 'Plus', online, I read that the 6% is only applicable to the first £2500, after that it drops back down to 0.10%.......and it also states that this account will cost you £7.95 per month for the privelage, so in effect, before taxes and whatever else this Government can steal from you, you end up with 5.50 per month, too much hassle for keeping track of your account for less than £5 a month, just drink 2 pint of beer less a month and you have save more than that :):):)

kippermanbike 10 Jul 2008, 11:35am

Hmmm, I agree with everything said about Alliance and Leicester, they pull you in with the offer of 8.5% (But only on the first £2500) Then screw you on the service. Chaging you an un-authorised overdraft fee just because it looks like you may go overdrawn. Telephone service is non-existant. and you have to pay 6p/min for the pleasure. STAY CLEAR. 8.5% Sounds good, but they soon take it away in charges and running costs. I am surprised they are allowed to call them selves a bank. I recommend SMILE. Cant wait to switch back to them!!

freespeech100 08 Aug 2008, 12:50pm

After an appalling experience I have finally received the charges back on my savings account with RBS, of £15 monthly, which I was not informed about when I had to transfer from the Woolwich, when they were taken over by Barclays.
I had saved all my statements and was required to take them into the bank before they would consider a refund. I was interrogated as to why it had taken 2 years to claim, (it was actually only 16 months.)
my explanation that I had been very busy preparing my house for sale, and subsequently occupied with viewers of my house, was seemingly unimportant, because I was asked the same question again, and again.
Then I mentioned my broken wrist and the fact that I could not drive my car,so had to make the journey by bus. when suddenly the Bank manager came out of his office and threatened me with "Throwing me out on the street". I replied that he was a big bully, because I was severely disabled and had to wear digital hearing aids, and how dare he speak to me as he did"
Two days later I received my rebate of unfair charges of £235.00.after my parting shot that I had never been charged for a savings account by any other bank, especially when their interest rate was so low.
But the amusing point was that with the Bank statement, I received one of those comparison charts by the same post. Any advice as to whether I should rate it extremely satisfied or extremely dissatisfied?

deborahk207 05 Oct 2008, 2:54am

I have had accounts with HSBC, First Direct, Barclays, Abbey, A&L and Citibank. First Direct is unquestionably the best in terms of convenience and customer service. The online facilities are the best and it links to my HSBC offshore so I don't get charged any transfer fees for transferring money between the two accounts.

I opened an A&L Account this year, tempted by the high current account interest rate and regretted it within the first month. I transferred in about a large sum into that account from First Direct for a 10% deposit on a home, only to find out that the maximum you can pay out via online banking is £10,000 a day! Shocking! As I didn't have time to go to a branch, my poor lawyer had to wait many days for the amount to be transferred over to him! £10,000 a day at a time! I also question the instant access e-saver - it's hardly instant access when you have penalties on your interest for making withdrawals. First Direct on the other hand has a lower interest, but calculates interest daily. I found that because i kept dipping into my e-saver account, i was much better off with a lower interest rate and no penalties.

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