Major bank to AXE key money-making feature from popular account in weeks
A MAJOR bank is axing a key money-making feature from all current accounts in weeks.
Digital bank Starling is ending interest payments on current accounts for all customers in February.
At the moment, the bank pays 3.25% interest on balances up to £5,000.
This means that a customer with the maximum amount in their account could earn an extra £162.50 a year in interest.
However, this feature will be removed entirely on Monday, February 10.
Customers who currently have a sole or joint current account with Starling will continue to benefit from the perk, as well new customers, until this date.
A spokesperson for Starling Bank said: “We continually keep our products under review and have taken the decision to remove current account interest from February 10, 2025.
“Customers will still benefit from fee-free spending abroad and 24/7 customer service.”
For customers still wanting to save with Starling, the bank has introduced an easy access savings account paying 4% interest.
Saving £5,000 into this account would yield £200 in interest over 12 months.
However, customers could still get a better savings rate elsewhere.
SAVINGS MISTAKE
Over a quarter of adults (28%) keep their earnings in current accounts that pay no interest, according to the Building Societies Association (BSA).
Most major high street banks do not offer any interest on current account deposits.
This means millions of Brits are missing out on free cash because they keep their savings in the wrong account.
There are 24 that do pay interest but they still pay lower rates than easy access savings accounts, according to Moneyfactscompare.co.uk,
For example, Kroo, an online-only challenger bank, offers a 3.65% interest rate on current account deposits up to £500,000.
However, savers could earn more by moving their money to GB Bank’s easy access savings account, which pays 4.86% interest with a minimum deposit of just £500.
If you keep your cash in non-interest current accounts, you’ll miss out on hundreds of pounds in interest.
MAXIMISE YOUR EARNINGS
ADVICE from Sarah Coles, head of personal finance at Hargreaves Lansdown:
You worked hard to earn it, so now your money should be working just as hard for you.
There’s no excuse for it to be lying around gathering dust in a current account.
It’s easy to fall into the habit of leaving your cash lying dormant in your current account, but this is a terrible idea.
In many cases, you won’t make a penny in interest, so you’re missing out on a huge amount of money.
You can usually make far more interest from an online bank than you can in the same kind of account with one of the high street giants.
A savings comparison site will help you track down the best rates.
If you leave your savings languishing because it feels like too much effort to find an alternative, a cash savings platform might appeal.
You just open one account, then you can switch between accounts with loads of different banks, and see everything in one place.
They have apps, so making the most of your savings is no harder than just shoving it in a current account and missing out on all this interest.
What are the best savings rates?
There are four types of savings accounts fixed, notice, easy access, and regular savers.
The rates offered on each of these accounts vary, but we’ve rounded up the best available right now.
If you’re looking for a savings account without withdrawal limitations, then you’ll want to opt for an easy-access saver.
These do what they say on the tin and usually allow for unlimited cash withdrawals.
The best easy-access savings account available is from GB Bank via savings platform NuWealth, which pays 4.86% – and you only need to pay a minimum of £500 to set it up.
This means that if you were to save £1,000 in this account, you would earn £48.60 a year in interest.
If you’re looking to grow your savings and don’t need regular access to your funds, a fixed-term bond or notice account could be a better option.
The best notice accounts offer slightly higher rates than the best fixed-term bonds.
These also come with more flexibility when accessing your cash.
For instance, GB Bank’s 95 day notice account offers savers 4.91% back with a minimum £500 deposit, for example.
The best fixed rate currently offered is Vida Savings’ one-year fixed bond, which pays 4.77%, requiring a minimum investment of £100.
If you want to build a habit of saving a set amount of money each month, a regular savings account could pay you dividends.
Principality Building Society’s Six Month Regular Saver offers 8% interest on savings.
It allows customers to save between £1 and £200 a month.
Save in the maximum, and you’ll earn 27.53 in interest.
While regular savings accounts look attractive due to the high interest rates on offer, they are not right for all savers.
You can’t use a regular savings account to earn interest on a lump sum.
The amount you can save into the account each month will be limited, typically to somewhere between £200 and £500.
Therefore, if you have more to save, it would be wise to consider one of the other accounts mentioned above.
What’s next for savings rates?
Savings rates usually rise and fall with the Bank of England’s base rate.
This was cut for the second time in four years from 5% to 4.75% in November, but then rates were held at 4.75% in December.
The next interest rate announcement is on February 6.
If interest rates continue to fall, it spells bad news for savers, whose rates typically fall when the Bank’s rate is cut.
However, in the meantime, opting for a fixed bond can be a useful bet to help ride out future cuts to the base rate.
FINDING THE BEST SAVINGS RATES
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as MoneyFactsCompare.co.uk and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you’ll want to consider any account that currently pays more interest than the current level of inflation – 2%.
It’s always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you’re saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.