The Money team at Sky News has partnered with the independent experts at Savings Champion to help you maximize your savings. Each week, we will explore different savings options, discuss the advantages and disadvantages, and highlight the best deals available in the market.
This week, we are focusing on interest-paying current accounts, and Anna Bowes, the founder of Savings Champion, shares her insights. While interest-paying current accounts may not be as common as they used to be, they can still offer competitive interest rates, especially considering that most current accounts do not offer any interest at all.
According to the Bank of England, there is currently £254 billion held in non-interest bearing accounts. Interest-paying current accounts provide savers with an alternative approach to maximize their savings and earn as much interest as possible.
However, it’s important to note that these accounts are usually more complex than traditional savings accounts, and there are certain requirements and potential pitfalls to be aware of in order to reap the benefits they offer. Some of these traps include low maximum balances, introductory rates, monthly fees, the need to set up direct debits, and minimum amounts for monthly deposits and maintaining the account.
When choosing an account, it is crucial to consider these factors and assess whether you may encounter any difficulties in meeting the account requirements. If you anticipate any issues, it may be worth exploring alternative options that better suit your circumstances.
Setting up standing orders can be a simple and effective way to ensure you meet the necessary deposit and withdrawal amounts each month, especially if you have multiple current accounts. Although it may take some time to set up initially, the competitive rates offered by these accounts can make it worthwhile. Additionally, it’s worth noting that many of these accounts can be opened without having to switch your main current account.
Lastly, it’s important to remember that some of these interest-paying current accounts provide access to exclusive savings accounts that often offer competitive rates, particularly with regular savings accounts.
For a comprehensive overview of the best rates and the pros and cons of savings and interest-paying current accounts, visit Savings Champion’s website.
Overall, interest-paying current accounts can be a valuable option for savers looking to make the most of their savings. By carefully considering the requirements and potential pitfalls, and utilizing strategies like setting up standing orders, savers can potentially earn higher returns on their money.