Banks 'scrapping interest rates on current accounts'

Thursday, 07 October 2010 12:00

High street banks including NatWest and Royal Bank of Scotland have joined a growing list of institutions that have scrapped credit interest rates on their current accounts, according to new research.

Moneyfacts said Spain-based Santander has also stopped paying credit interest on some products, while limiting returns to balances under £2,500 on others.

It added that Barclays, the Co-operative Bank and Europe’s biggest bank HSBC have already ceased paying credit interest.

Indeed, more than half (55 per cent) of the current accounts on the market now offer no returns for being in the black and another 28 per cent pay 0.10 per cent or less.

Moneyfacts spokeswoman Michelle Slade said: “Most people bank with one of the big banks, so it is highly likely the majority of people are receiving no interest on the money in their current account.”

Responding to the research, the British Bankers’ Association said current accounts offer small amounts of interest because they are designed to manage everyday transactions and have never been intended to be a home for people’s savings.

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