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.