Interest-bearing current accounts look to be slowly coming a thing of the past, recent research has found, with 55 per cent of the UK’s current account offerings bearing no interest whatsoever, while an additional 28 per cent pay either 0.10 per cent or less interest.
The research also found that, in addition to interest rates becoming a thing of the past, over the last half of a decade the number of fee-paying current accounts available on the market had literally doubled.
According to Moneyfacts.co.uk, the financial analysis website that commissioned the research efforts, five years ago only 25 current accounts on the market charged a fee. That figure has risen steadily, as in 2008 the number was 36, last year’s count was 41, and the current year’s total was 49.
The Moneyfacts.co.uk study also revealed that several banking institutions, which include both RBS and NatWest, have discontinued their practice of paying interest on the entire line of their current accounts. These two financial services providers join the ranks of the many other lenders who have already ceased their credit interest policies, such as the Co-operative Bank.
In comparison, while Spain-based bank Santander has ceased paying any interest on many of its current accounts, it is offering its new customers an offering that boasts not only a 5 per cent credit interest but also offers a sign-up bonus of £100. Unfortunately the requirements for the current account include topping it up with a minimum of £1,000 on a monthly basis in order to preserve the credit interest.
Michelle Slade, spokesperson for Moneyfacts, stated that while losing the 0.1 per cent interest that many customers had on their current accounts may not impact them very hard, but banks can significantly save on costs by instituting the new policy.
Additionally Ms Slate stated that consumers who maintain a significantly large current account balance should begin considering switching to an interest-bearing account of some kind.