TSB has unveiled a new high-interest current account, offering 5% AER on savings up to £2,000, which will launch on 31 March 2014.
The Plus account is TSB’s first new bank account launch since returning to high streets across Britain in September 2013.
With a rate of 5% AER, the new bank is set to match Nationwide’s market-leading FlexDirect current account, which offers the same rate but on up to £2,500.
However, TSB only requires a monthly deposit of £500, whereas Nationwide has set the minimum at £1,000 per month.
Jatin Patel, products director at TSB, said the fact that the bank “helps communities thrive” across the country makes it stand out from other banks.
“TSB was born to bring more competition to Britain’s high streets and we’re confident our new TSB Plus Account will do just that,” he said.
“All we ask is for people to pay in £500 a month and work with us by registering for paperless statements and correspondence, so the money we save can be put straight back into people’s pockets as interest.”
What is TSB Bank?
In 2012, a proportion of Lloyds bank customers were informed that their branches would be transferred to a new separate bank called TSB.
This would then pave the way for TSB bank to be listed on the stock market later in 2014 – a consequence of the agreement that allowed Lloyds to be bailed out by the EU.
Despite the change, mortgages and overdrafts being held at the time of the transfer continued as normal, without any change to customers’ rates or terms.
Since launching in September 2013, the bank has been keen to portray itself as different to the competition by announcing that all of its customers’ money will stay in Britain.
One of its key messages has been that TSB will not gamble money on overseas speculation or investment banking.
Best high-interest bank accounts
Commenting on the news, personal finance expert, Jafar Hassan, said that banks were now fighting for customers’ money.
“More good news is that the 5% rate is not limited to one year, unlike Nationwide’s account that offers 5% interest on balances up to £2,500, but only for the first year,” he said.
“The TSB account is an extremely attractive offer, particularly to those who are new to the concept of making the money in your current account work harder.
“However, for people with balances of £5,000 and over, the Santander 123 account with 3% AER might work out better.
“With the six month anniversary of the current account switch service coming up soon, it’s no surprise that banks are pulling out all the stops.
“The latest proposed current account from M&S aims to capitalise on its brand appeal by offering £100 in gift vouchers to new customers.”