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NatWest loses current account interest, will Brits lose patience?

NatWest are cutting interest rates on their current accounts

I got some post recently from NatWest, telling me that due to changes to their terms and conditions, they won’t be paying me any interest on the money in my current account from 22nd September this year.  These changes affect 7 of their accounts – including their basic bank account, their student and graduate accounts and their ‘gold’ account.

I probably shouldn’t complain too much, because I have a brilliant interest-free graduate repayment loan from NatWest, but if it wasn’t for that, I’d definitely be switching.

I don’t earn that much interest on the balance in my current account, but this still got my back up a bit.  It’s the principle, rather than the money – my old-fashioned understanding of the relationship between a bank and its customers was that you let them look after your money and they try and make more money from it, and in return you earn some interest.

NatWest aren’t the only bank to do this – RBS and Santander are also cutting interest on some of their accounts, while there are already current accounts from HSBC, Nationwide, Barclays and the Co-operative Bank that don’t pay interest.

It can feel a bit like there’s no reward for being in credit.  However, there are still good deals out there, but you might find that they’re restricted to new customers only or that they’re introductory offers.  For example:

  • Santander currently offers a rate of 5% AER for a year on balances of up to £2,500 in their Preferred In-Credit Rate account (plus £100 cashback for switching, for a limited period and subject to some Ts & Cs).
  • The Halifax Reward Current Account pays you £5 a month when you pay in at least £1000 a month.
  • The Lloyds TSB Classic Current Account pays a rate of 2.5% AER

So it seems like the best course of action is to shop around and be prepared to switch – there’s no point in staying with the same bank if there’s a better deal elsewhere, and switching is a much more simple process these days.

From 2nd August, NatWest are also putting up the overdraft rates on some of their current accounts too – so if you’re with them and you’re in the red, now could be a really good time to do a comparison and make sure you’re getting a good deal.

  • Mark

    I know banks don’t deserve the loyalty the get from some Customers, which is often apathy in not switching rather than loyalty but, is it really worth switching just for about £1/month. Also, if there are other benefits attached to your account, like a loan or a student railcard, then you will loose much more of you switch?

  • GB

    When I started work in the late 1960’s no bank gave interest on its current accounts. That doesn’t bother me, but what does is when are the banks going to start giving a decent, honest rate of interest on their savings-accounts? It’s all one-way and one-sided at the moment.

  • Rosemary

    As far as I’m concerned, this is theft by the banks. they have OUR money, charge interest to people who borrow OUR money and then ‘remove’ the miserly interest we used to enjoy!
    I wrote to the Halifax about this and was told how cheap it was to have overdrafts/loans and I could get £5 if I paid in £1000/month, which I don’t have available.
    I suppose the meagre interest which used to be paid on our current accounts will go to pay for the bankers ‘well-earned’ bonuses!

  • Phil Landshoft

    The point of switching is not to gain/lose £1 it is to make the banks sit up and take notice. If more people switched accounts when a bank does something perceived to be ‘bad’ by it’s customers (for example if a bank decided to start charging £10 per month for running a current account whether in credit or not) the bank would lose customers, ergo profit, and would have to, at the very least, think seriously about reversing the decision.

  • Jeanette Moxon

    I guess we should all have seen the non payment of interest on current accounts coming. For my part I`ve been a Nat West customer for years and will not be changing. The secret is to only keep in your current account what you need to be there and to put the rest of your money elswhere. My debit card has twice been cloned and Nat Wests prompt actions on both occasions saved me a lot of heartache. I have to say its great to be able to talk to a real person in your own branch if you need advice on the phone.

  • Grace

    I will probably keep all my money under my bed. They don’t want to give us interest and yet they use our money to borrow others and charge over 20% on some cases. Bad move because I will definately not be making them rich from my sweat.