TSB slashes interest on top current account from 5% to 3% – here are the best alternatives
THOUSANDS of TSB customers will see the top-paying rate on their current account drop from 5 per cent to 3 per cent and new users will also be hit.
From July 2, the bank is slashing the interest it pays to both new and existing users of its Classic Plus Current Account.
The account has paid 5 per cent on balances of up to £1,500 - netting users up to £45 a year - since May 2018.
But the perk, which was introduced as a sweetener following the bank's colossal IT outage, is now dropping back to its previous level.
To benefit from the 3 per cent, users will continue to have to pay in at least £500 a month, be registered for internet banking, and receive paperless statements and correspondence.
TSB wouldn't tell us how many customers will be hit but it's likely to be hundreds of thousands given the bank has 5.2million customers in total.
How do I switch bank account?
MOST banks will require new customers to switch using the free Current Account Switch Service.
This scheme takes care of the bank switching process for you by moving all your incoming and outgoing payments, moving your outstanding balance and closing your old account.
The majority of banks are signed up to the service so you’ll use it automatically when applying and switching to a new account via the bank’s website or in branch.
The guarantee means that if anything goes wrong with the switch you will be refunded for any financial losses incurred.
In a bid to persuade customers to stay the bank is today launching a refer a friend bonus.
This will see people who switch to TSB’s Classic or Classic Plus Current Account via its paid £75, while the friend will also get £75.
You can refer up to five friends in total with the offer available to those who apply by June 30 and switch by July 26.
Craig Bundell, TSB’s director of personal current accounts, said: “Our Classic Plus remains one of the UK’s best current accounts.
“Giving something back to our customers has always been important to us and so I’m delighted that we’re today also launching our popular refer a friend offer."
What are the top paying current accounts now?
The best current account for you depends on what you want from your bank, whether that's interest, cashback or a cheap overdraft.
TSB's account will still be best for those saving £1,500 or under for more than year but if you're saving for a shorter length of time or have a bit more cash to spare then Nationwide's FlexDirect account will now take the top spot.
It pays 5 per cent on up to £2,500 for a year and then 1 per cent after (you'd make £125 if you saved the full amount for a year). You just need to pay in at least £1,000 a month.
There's also Bank of Scotland's Vantage account paying 1.5 per cent on up to £5,000 if you pay in at least £1,000 a month (you'd make £75 a year if you saved the full amount), stay in credit and have at least two direct debits a month coming out.
You can also earn 1.5 per cent on up to £5,000 with Club Lloyds (you'd make £75 a year if you saved the full amount), although again you need to have at least two direct debits a month going out and pay in at least £1,500 a month.
That said, the current top paying easy access Cash Isas and savings accounts also pay 1.5 per cent and you can save more in these than with the bank accounts.
You can also get more for your money by switching bank than referring a friend as both First Direct and M&S pay users £100.
M&S users can also get an additional £80 for staying eight months after switching although bear in mind that its up to £180 bonus is paid in vouchers for the store.
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