According to new research carried out by financial group Moneyfacts, almost 50% of all current accounts offered to consumers provide no return on their money.
The number of accounts paying no returns at all has risen from 19% recorded a year ago, to 49%. The new figures have also shown that current accounts paying 0.10% or less now constitute to 83% of the market, compared to 57% 12 months ago.
Over the last year, the average rate of interest paid on current accounts has fallen from 1.54% to 0.71%. However, in the same period, the average overdraft rate has increased from 12.99% to 13.2%. "current accounts are the most widely used accounts, yet is is surprising how many people are reluctant to switch in order to get a better deal," said James Booker, a spokesperson for Which4U.
What consumers need to be aware of is that there are still some great current accounts out there offered by some of the major banks, paying interest rates of up to 6%. These high rates are usually capped at around £2,500, so anything above that would be subject to a lower rate – which can often match or even beat a number of other rates offered on other accounts.
The Alliance & Leicester Direct Current Account and the Abbey 6% Current Account both offer interest rates of 6% on balances of up to £2,500 for 12 months. Accounts can be opened with no fees and an initial deposit of £1 or more. As well as great rates, both accounts also offer interest free overdrafts of up to £2,000 for 1 year. The only catch with these accounts is that you deposit at least £500 per month, so simply have your salary/pension paid in monthly to benefit from these great accounts.
If you are under 21, you may be interested to hear that you can earn 5% on balances of up to £1,000 fixed for 12 months, together with access to a £2,000 0% interest overdraft. The Alliance & Leicester under 21 account will also credit you with £50 if you recommend a friend.
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