It has been announced that the rate on the provider’s Classic Plus current account will be chopped in July, leaving just one option available paying the top rate of 5% AER.
TSB will cut the rate from its current joint-leading level of 5% AER, to a more modest 3% AER from 2 July 2019. The interest rate continues to be applicable only on balances of up to £1,500.
And this may not be a huge surprise for those holding the account, who already saw the rate cut to this level in January 2017, before being given an evidently temporary reprieve from May 2018, when the rate was put back up to 5% AER.
Although a significant cut, 3% is still a competitive rate because of the cuts that have taken place from a number of other providers in this area of the market over the last few years.
And, whilst certainly disappointing, the revised rate still exceeds the very best rates available on standard easy access savings accounts.
This means that this account will remain a viable option for those savvy savers that use interest-paying current accounts to squeeze as much return as possible on their money – albeit, of course, on much smaller balances than you are able to put into a savings account.
This move will see Nationwide out on its own at the top of our table – paying 5% AER – though this option is not without its drawbacks. The 5% rate lasts just 12 months, after which time it will drop to a less impressive 1% AER.
The next best options each pay 1.50% AER – half the revised rate of the TSB account. This rate is available on current accounts from Lloyds Bank, Bank of Scotland and Santander.
For more information on each of the options listed above, take a look at our interest-paying current account selection.
>> Interest-paying current accounts
So, a disappointing move overall - but all is not lost, as the account still pays a competitive rate compared to other current accounts and the wider savings market generally.
There is still a lot to be said for using an interest-paying current account to make the most of your money, particularly if that money is sat earning next to nothing.
If you need any help with finding the accounts that are most suitable for your needs, please call us on 0800 011 9705 to speak to one of our expert savings specialists.
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