Keep it current – use a bank account to maximise your savings
While rates have nudged up recently, it is still hard to get a good return on savings you may need to access it in an emergency. The average easy-access savings account pays just 0.37%, according to research by Savings Champion.
For those with smaller savings pots, current accounts can be a better place to save. Providers are offering rates of up to 5% on their current accounts, so many consumers are saving here instead. A Moneywise poll of 781 readers in October found that 66% use one or more current accounts to boost their savings.
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Current accounts often have more Ts&Cs than a bond or savings account, such as minimum pay-ins or direct debts to set up, but the perks usually outweigh the effort.
The highest rate of interest is offered by the Nationwide FlexDirect account. This pays 5% interest on balances up to £2,500, although this is just a 12-month introductory offer. It then drops to 1%, so consider switching at that point.
To get the top interest rate, you'll need to pay in at least £1,000 a month, but there are free agreed overdrafts on offer for the first year. You'll also be able to open the linked Nationwide Flexclusive Regular Saver, which pays 5%.
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The Tesco Bank Current Account pays 3% interest on balances up to £3,000 and has guaranteed to maintain this rate of interest until 1 April 2019. Users must deposit at least £750 and pay out at least three direct debits each month.
It also rewards debit card spending with Clubcard points. You earn one point for every £1 spent in Tesco, plus one point for every £8 spent elsewhere.
A 3% interest rate is also offered by the TSB Classic Plus account, but only on balances up to £1,500. To get this rate, you'll need to pay in at least £500 a month, register for online banking, plus opt in for paperless bank statements and correspondence. New customers also earn £5 cashback every month if they have two active direct debits, plus another £5 cashback for spending with their debit card 20 times a month. This cashback offer ends on 30 June 2018.
For higher balances, the Bank of Scotland Vantage account pays 2% interest on balances up to £5,000 if users pay in £1,000 each month, stay in credit and pay out at least two direct debits. To get this interest rate, open a current account with the bank and request its Vantage add-on.
Lloyds Bank's Club Lloyds account also pays 2% interest on balances up to £5,000. You must have two direct debits set up and pay £1,500 into the account every month. But beware the £3 monthly fee if you do not meet the minimum pay-in level. Account holders can get perks such as six cinema tickets or Gourmet Society membership.
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For those with bigger savings, the Santander 123 Current Account is Moneywise's Best Buy. It pays 1.5% interest, but is available on balances up to £20,000. It comes with a £5 monthly fee and cashback on household and utility bills.
This requires at least a £500 monthly pay-in and two direct debits. Account holders can open Santander's 123 Regular eSaver, offering 5% for the first 12 months.
Virgin Money Essential Current Account If you've suffered with bad credit or persistent debt in the past and aren't eligible for a current account, then you may need to open a basic bank account. These accounts offer few bells and whistles, but give people the chance to rebuild their finances. My Moneywise Best Buy is the Virgin Money Essential Current Account.
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The offer makes it the highest cash bonus on the market but you will have to pay £1,500 into the account
Submitted by Sara on 13 January 2018
In reply to by anonymous_stub (not verified)
My daughter has the besT time ever at the cinema we a 'are going to purchace pay monthly passes
Virgin Money launches digital current account paying 0.5% interest