Best High Interest Current Accounts

What is a high interest current account?

High interest rate bank accounts are current accounts that offer competitive rates of interest on your in-credit balance. These accounts are ideal if you’re seeking a decent return on funds you need to keep accessible, and for this reason are often used as a savings vehicle. The very best high interest current accounts may offer additional perks as well, such as cashback on your spending or direct debits, offering the complete current account package.

Note that there’s typically an upper limit on the balance these accounts will pay interest on, and sometimes a time limit as well. You’ll normally be expected to pay a minimum amount into the account each month too, and some charge a monthly fee, so make sure to compare high interest current accounts thoroughly and check that the amount you’ll receive in interest will make up for any charges.  

Why use a high interest current account?

The main reason to use a high interest current account is to earn additional interest. Many people use them as a separate savings account, offering the ideal combination of flexibility and returns. There’s no need to lock your money away (as is the case with fixed rate bonds) and you can still use the money for your everyday expenses, and if there’s an unexpected bill to pay, there’s no need to worry about transferring funds between different accounts. You can find out more about how to use a current account as a savings vehicle in our guide.

What to watch out for

Though these accounts have their perks, there are things to watch out for as well. Always check things like the fees charged, overdraft rates and minimum income requirements, as well as the balance you’ll be able to earn interest on, to make sure it provides sufficient benefit. Note that many providers expect these accounts to be your main current account, and will often expect a certain number of direct debits to be paid from it. And, as with all kinds of financial product, it’s vital to carefully compare high interest current accounts so you know you’ve got the deal that meets your needs.

Bear in mind that bank accounts with high interest are best suited to those who have income to spare and rarely dip into the red. Overdraft charges aren’t always competitive in this sector of the market, so if you often need to use one, you may be better off looking for the best accounts with overdrafts instead.

Pros vs. cons of high interest bank accounts

High interest account alternatives

Not sure if high interest rate bank accounts are for you? There are plenty of other options to consider depending on your needs.

For example, if a high rate of interest is not your priority, you could consider a packaged account instead. These accounts typically offer travel insurance, mobile phone cover and breakdown cover, among other incentives, in exchange for a fee. Just make sure you really need the benefits on offer, and check they’re not available elsewhere for less. Or, if you like the security of having a financial buffer in place it’s worth looking for a bank account with an overdraft, or if you’ve got a poor credit score, there are bad credit bank accounts as well.

If you really want to focus on your savings, it may be worthwhile seeking a separate savings account. Easy access accounts offer competitive rates of interest with similar flexibility to a bank account, or fixed rate bonds could be ideal for those who have a large lump sum they don’t mind losing access to. A regular savings account could also be the perfect alternative – they still expect a minimum amount to be paid in each month, but access is more restricted, so you won’t be tempted to dip into your savings pot.

Yet for many people, these accounts could be a valuable addition to their savings portfolio, whether or not it’s their sole bank account. Compare the options using our chart to find the best high interest current accounts on offer.