Club Lloyds savers braced for interest rate change, while TSB rate cut also takes force
Savers with a Club Lloyds current account will see their monthly interest slashed when new rates come into effect this weekend.
Lloyds Bank announced a change in interest rates on its flagship Club Lloyds current account last October, and the bank has confirmed these new terms will be introduced on Sunday 8 January.
From this date, account holders will receive 2% interest payable on balances up to £5,000. At the same time the monthly account fee will drop to £3 from £5. Previously account holders were paid tiered interest of up to 4% on balances between £1 and £5,000.
The move affects all Club Lloyds branded accounts, including those no longer on sale.
TSB Classic Plus rate cut
Elsewhere, TSB customers with a Classic Plus account are also receiving less interest than before. Changes to this account took effect on Wednesday 4 January, and mean customers now receive 3% interest on balances up to £1,500. Previously this account offered 5% interest on balances up to £2,000.
However, new customers who opened this TSB account on or after 1 June 2016 will continue to receive 5% cashback on contactless purchases until 30 September 2017.
Halifax and Bank of Scotland to slash rewards
Customers with a Halifax or Bank of Scotland Reward Current Account will see their monthly reward lowered from the start of next month.
From 1 February, the reward will be reduced from £5 to £3. The same change also applies to the fee-paying Ultimate Reward Current Account.
Those using current accounts as a vehicle for their savings will be disappointed to see these interest rate changes come into force.
For those looking to switch, Nationwide’s FlexDirect account pays a higher 5% interest on balances of up to £2,500. However, this is a 12-month bonus only, and will drop to just 1% interest after a year.
For those with larger balances, the Santander 123 Current Account may be worth considering. It pays 1.5% interest on balances up to £20,000, although there is a £5 monthly charge.
Despite interest rates being cut, current accounts still boast better returns than the top easy access savings account – the Post Office Online Saver. This offers savers 1.01% interest, including a 0.76% bonus for the first year.
- See the top savings rates for best buys
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.