Some of the points to consider when choosing the best current account interest rate are whether you always keep a positive balance, whether you are able to pay in a minimum amount each month, whether you are a student or have recently graduated, and if you are willing to pay a monthly fee. Online current accounts often offer higher interest rates, so applying online is another simple way to earn higher interest.
The current account market is very competitive, and because of this, there are many offerings available to consumers. In 2010, certain banks offered current accounts with interest rates of up to 5% per year. Some banks even pay a bonus to consumers who switch their current accounts from other banks, and some will offer a fixed monthly bonus instead of an interest percentage. Certain banks offer higher current account interest rates provided that you comply with certain terms.
If you frequently overdraw your account, you should choose a package that offers an overdraft facility while still offering competitive interest rates. If you choose a current account that offers no overdraft facility but has high interest rates, it is normally in your interest to avoid being overdrawn. Bank fees and penalties for overdrafts are much higher than any interest earned.
Some banks require their customers to pay in a minimum amount every month in order to qualify for the higher current account interest rates. If you earn a monthly salary and you can have your wages deposited into the account, this can be a good option. Some current accounts also offer an investment option and offer higher interest rates provided that a minimum balance is sustained.
Student current accounts generally offer overdraft facilities without any interest or fees, but the amount of protection offered and the repayment period varies greatly from one provider to the next. This is a useful option for those who need an overdraft and are in school or who have just completed their studies. It also ensures a higher interest rate while having access to an overdraft facility.
Deciding whether you are willing to pay a monthly fee will help determine whether a premium or standard current account will serve your needs best. Premium accounts offer added benefits, such as free travel insurance or discounts. Standard current accounts generally do not have any monthly fees, and higher current account interest rates are offered on the account balances.