Best high interest current accounts in the UK 2022

Latest reviews of current accounts with interest

Virgin Money - Virgin Money Current Account - Age 18 and over

Customer rating

★★★★★

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£0.01

Min. opening balance

£0

Account fees

2.02% AER

Interest (AER)

• Account info
• Pros/cons
• Details

Earn 25% cashback for 60 days on supermarket and fuel spend when using a Virgin Money debit card, up to a maximum amount of £160.

This account from Virgin Money offers a host of benefits without the monthly fee. Account holders can earn a competitive rate of interest on balances up to £1,000, plus take advantage of an exclusive linked savings account if they want to squirrel away any spare cash. On top of this, users will also be able to benefit from fee-free foreign transactions and cash withdrawals if they use their debit card abroad. The account also offers an arranged overdraft and can easily be managed online or via the app. The app can help users track their transactions and get better at budgeting. To qualify for the account you’ll need to be at least 18 years old and have a good credit score.

Representative example: If you use an arranged overdraft of £1,200 you'll be charged interest at 19.9% EAR variable .

• No monthly fee
• Pays interest on in-credit balances
• Fee-free foreign transactions
• Easy to apply for and manage account online or via the ap

• High interest charged on overdrafts
• Interest only payable on small balances
• You’ll need a good credit score to apply

Interest rate	2.02% AER
Minimum opening balance	£0.01
Minimum operating balance	£0.01
Switch service guarantee	Yes
Account fee	£0
Overseas card transactions	£0
Overseas cash withdrawals	£0

Nationwide BS - FlexDirect - Funded

Finder rating

★★★★★

Customer rating

★★★★★

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£0

Min. opening balance

£0

Account fees

5% AER

Interest (AER)

• Account info
• Pros/cons
• Details

Get £200 to switch.

Nationwide’s FlexDirect account is a good option whether you’re someone who stays in credit or someone who tends to dip into the red. For those who usually hold a balance in their account, the FlexDirect account pays a competitive fixed rate of interest for the first 12 months on balances up to a set amount. Interest is still paid after this but at a lower rate. Alternatively, if you tend to rely on your overdraft, the account offers an interest-free arranged overdraft for the first 12 months. There is no monthly fee for maintaining the account which can be managed online. To open an account, you’ll need to be aged 18 years or over and a UK resident.

Representative example: If you use an arranged overdraft of £1,200 you'll be charged interest at 39.9% EAR variable .

• Pays interest on in-credit balances
• Interest-free overdraft for the first 12 months
• No monthly fee
• Account can easily be opened online

• Interest rate drops after the first 12 months
• Interest is charged on overdrafts after the first 12 months
• Account can only be managed online

Interest rate	5% AER
Minimum opening balance	£0
Minimum operating balance	£0
Switch service guarantee	Yes
Account fee	£0
Overseas card transactions	2.99%
Overseas cash withdrawals	2.99%

Virgin Money - Club M Account - Age 18 and over

Customer rating

★★★★★

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£0.01

Min. opening balance

£14.5 per month

Account fees

2.02% AER

Interest (AER)

• Account info
• Pros/cons
• Details

Earn 25% cashback for 60 days on supermarket and fuel spend when using a Virgin Money debit card, up to a maximum amount of £160.

In return for a monthly account maintenance fee, the Virgin Money Club M account offers a range of benefits. These include interest paid on credit balances and an exclusive linked savings account. Account holders can also enjoy worldwide family multi-trip travel insurance, including their own concierge service and 24-hour medical advice. Plus, the account's contactless debit card does not charge fees for foreign spending or making cash withdrawals in the UK or abroad. A range of gadgets, including mobile phones, laptops and cameras will also be insured worldwide and you’ll have UK breakdown cover for your car. You’ll also be able to arrange an overdraft and you can apply for the account online or over the phone as long as you’re aged 18 or over. In addition, the Virgin Money app can help you set up budgets, top up your savings and sort out your spending.

Representative example: If you use an arranged overdraft of £1,200 you'll be charged interest at 19.9% EAR variable . Account fee of £14.5 per month.

• Perks such as worldwide travel insurance, gadget insurance and UK breakdown cover
• No fees for using your card abroad
• Interest paid on credit balances
• Exclusive linked savings account

• Monthly fee applies
• Interest charged on overdraft

Interest rate	2.02% AER
Minimum opening balance	£0.01
Minimum operating balance	£0.01
Switch service guarantee	Yes
Account fee	£14.5 per month
Overseas card transactions	£0
Overseas cash withdrawals	£0

How do high interest current accounts work?

As you may have guessed from the name, high interest current accounts are standard current accounts that also pay an interest rate on your account balance up to a certain limit.

The interest rate can be quite juicy, at least if you compare it to easy access savings accounts, but the balance limit on which it’s paid is generally low, so don’t get your hopes too high. You may also have to meet certain conditions (for example pay a certain sum into the account every month) to get the best rate.

The interest will usually be paid monthly directly into your current account.

How to compare high interest current accounts

The higher the interest, the better, right? Well, yes, but that’s not the only aspect you should take into account when comparing deals:

• Interest rate. Top-paying accounts may reach a 5% annual rate. Sometimes. If you’re lucky.
• Eligibility criteria. You’ll usually need to pay a minimum amount into the account every month to get the advertised rate. With some premium accounts, this limit is fairly high and may be more than your monthly salary, in which case you should probably look for an alternative.
• Balance limit up to which the top rate is paid. A great interest rate often comes with a low limit. If you don’t have much in savings, it’s a great solution. Otherwise, you may want to see if you can get more from a competitor that pays a lower late but on a higher balance. However, don’t forget to take into account how much that extra balance could be worth in interest if kept in a separate savings account.
• Time limit. Top rates are often just introductory offers that last a year or so. What will happen when the deal is over?
• How much you can earn in a year. That’s the raw figure you should ultimately be looking at. It allows you to figure out which account is best, not in general, but for your particular situation.

You should also spare a thought for the features you may be giving up in return for a higher interest rate. How’s the customer service of the bank you’re considering? Is the app slick? Can you get an overdraft or a credit card if you need them? Also, in the worst case scenario, is it really worth putting up with a terrible banking experience for £100 in interest a year?

High interest current accounts vs savings accounts

Why choose when you can have both? Most savers will be better off by opening both a high interest current account and a savings account on top. It all comes down to how much you have saved and are planning to save in the near future. You should follow these steps:

• Fill your high interest current account first. Up to the limit. Easy access current accounts pay a lower rate, so they should come second.
• Compare savings accounts and open one. Choose the best type of savings account for your circumstances. For example, can you afford to lock away part of your savings for a while? Fixed bonds offer better rates than easy access savings accounts.
• Regularly move money from your current account to your savings account. Once you’ve reached the maximum balance of your high interest current account, you should move any extra money you want to save to your savings account (or you won’t earn interest on it).

Alternatives to high interest current accounts

As we said, if you’re looking for an easy access savings account that pays a similar interest rate, you’re probably out of luck. However, you could consider:

• Regular savings accounts. These are the only types of savings accounts that can compete with high interest current accounts when it comes to interest rates. They usually allow you to set aside a certain sum each month for a year. The main advantage is that your savings are kept in a separate account, so you’re not tempted to spend them. However, you usually can’t access your money until the product expires.
• Current accounts that offer a switching incentive. When you do the maths, most high interest current accounts won’t allow you to earn more than £100 a year in interest. There are comparable switching incentives available out there, so it’s definitely an option to consider.

Be careful when comparing the interest rate and the balance limit of a regular savings account with those of a high interest current account. With the current account, you can fill the account to the limit from the very start and earn the maximum interest possible. With the regular savings account, you can only add money to it monthly instead. So even if the two accounts offer the same rate and the same limit, the current account will actually allow you to earn more.

Pros and cons

The bottom line

Finding a current account that pays a juicy interest rate on in-credit balances ain’t as easy as it used to be. They’re elusive, but they do still exist, and usually pay a better rate than the leading easy access savings accounts. However, even the best high interest current accounts on the market today won’t be making you a great deal of cash.

Another thing to bear in mind is that these accounts usually limit the monthly amount on which they are willing to pay interest, and usually need to you pay in a certain amount each month in order to unlock the interest payment. A third factor to bear in mind is that in many cases the high interest rate is temporary, designed mainly to attract new customers.

If you’re only saving a little each month, but want to earn some interest, then a high interest current account can be a good choice. If you’re willing and able to put aside larger amounts each month, then you may be better off with a regular savings account.

Regular savers are the only types of savings account that match high interest current accounts when it comes to interest rates. They usually allow you to set aside a certain sum each month for a year. The only difference with these accounts, as compared to keeping your cash in the high interest current account is that your savings are kept in separate account, so you’re not tempted to spend them.

But these accounts come with restrictions as well. You usually won’t be able to access that money until the account reaches maturity, a bit like a fixed bond savings account.

Frequently asked questions

• Can I have more than one high interest current account?

  Theoretically, yes. However, for some of us, it can be hard to meet the required criteria more than once.

• Can I keep more money in my account than the balance limit after which no interest is paid?

  Sure thing. It’s not really a balance limit; the rest of your balance after that limit simply won’t accrue any interest.

• Can I get both a regular savings account and a high interest current account at the same time?

  Nationwide used to offer that, but it doesn’t anymore. To access a regular savings account offer, you usually have to hold your main current account with the same bank (and that account normally doesn’t pay any interest).