Savers Could Earn Over 10% by Using a Current Account

By: MoneyFacts

At a time when savings rates are reaching record lows, there are clearly far fewer ways of earning a decent return. Surprisingly, a current account could be a salvation for savers weathering the current climate, thanks to the rewards they offer.

By making use of the Current Account Switch Guarantee (which has been in force for three years this month), spenders and savers alike could earn up to £220 in the first year when moving their account.

Despite this service, millions could still be missing out on a better deal, as it has been estimated that just three million people have ditched their old account since 2013*.

In fact, our Moneyfacts.co.uk research shows that the most rewarding current accounts can offer an equivalent interest rate of up to 11% based on £2,000 cash in the first year. In contrast, the average easy access savings account would pay just 0.46%, which translates to a dismal earning of only £9.20 in the first year.

Rachel Springall, Finance Expert at www.moneyfacts.co.uk, said:

“Savers and spenders should definitely consider using a current account as a way of getting something a little extra, particularly with savings rates plummeting to record lows. Low interest rates encourage spending, but consumers could still take advantage of cash rewards if their savings aren’t going very far.

“The most important rule in using current accounts to earn cash is to meet eligibility criteria, which could be minimum funding requirements, or the need to bank online or set up direct debits, so it’s important to be aware of these before switching. It’s however not advised to move to an account just for its perks; it must be a cost-effective choice and suit most needs.

“A decent current account can give customers so much more than just free cash; with high interest rates on offer, exclusive products and even rewards on spending, there is an abundance of great incentives available. Borrowers can save cash too, with some accounts offering cost-effective overdrafts that could save frequent users hundreds of pounds.

“Whilst it may seem an effort to compare current accounts, given the variety on offer, it is worthwhile to establish if any money can be saved, either in overdraft charges or by earning a little something extra each month.”

*Source: Bacs Payment Schemes Limited switching figures. Since 16 September 2013 there have been 3,240,640 successful switches made using the switcher service.

www.moneyfacts.co.uk - The Money Search Engine

Moneyfacts.co.uk is the UK's leading independent provider of personal finance information. For the last 20 years, Moneyfacts' information has been the key driver behind many personal finance decisions, from the Treasury to the high street.

© 2005-2022 http://www.MarketOracle.co.uk - The Market Oracle is a FREE Daily Financial Markets Analysis & Forecasting online publication.