High Interest

I WANT a high interest account. Some of the big banks are finally being shamed into paying more interest to customers who are in credit. But some continue to be as mean as ever, as the television adverts from the likes of Halifax constantly remind us. At the lower end of the scale are bank accounts that pay no interest at all, or just 0.1 per cent a year gross. At the other end of the scale come the likes of Alliance & Leicester, Coventry, Halifax, Intelligent Finance, Lloyds TSB, Nationwide, Norwich & Peterborough and Smile which all have at least one fee-free account that pays at least 2.5 per cent interest to customers in credit. Several banks pay even more on linked savings accounts so check on their website or in your branch to see if you should sweep some cash from your current to a high-paying savings account.

Best buy bank accounts 'seeing biggest interest rate boost'

Though some savings accounts have been boosted by the 0.25 per cent base rate rise in January, not all have benefited, a financial website has claimed.

Moneyfacts.co.uk said that many providers had been selective about the accounts on which interest rates were raised, with best buy or core products receiving the full rise and lower-paying accounts seeing a smaller increase or no increase at all.

Savers should not assume that they will always benefit fully from a base rate increase, the firm advised.

Head of savings at moneyfacts.co.uk Rachel Thrussell said: "All this is doing is widening the gap between those savvy customers receiving the higher paying, often internet based accounts, and those customers who hold legacy accounts and who for no logical reason have remained loyal to their existing savings account, even though they are in some cases losing money when you factor in the impact of inflation."

However, with 20 per cent of savings accounts offering rates in excess of the bank base rate, there is plenty of choice of accounts which pay a decent rate of return, she added.

Banks and building societies relied on consumer apathy to some extent and could make money by holding large sums of customer balances in accounts with poor returns, she claimed.

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