Lloyds TSB is increasing the interest it pays on its ‘Plus’ range of current accounts from 4% to 6% in a bid to attract new customers.
The initiative means all customers who opt for a Plus account between now and 13 July 2008 will receive a bonus of 2% of their current account for 12 months. However, only the first £2,500 of the balance will earn this enhanced interest rate, with anything over only attracting the standard variable rate of 0.10% AER.
And to qualify for this interest rate customers must pay in at least £1,000 a month.
The Plus account range includes Lloyds TSB’s Gold Current Account, which costs £12 a month or £7 for the first three months if you apply online, and Platinum Plus, which costs £17 a month or £10 for the first three months if you apply online.
The offer is also available on Lloyds TSB’s Select Plus Current Account, but this is no longer available to new customers.
The only free current account within the Plus range is the Classic Plus Account.
Catherine McGrath, director of current accounts, Lloyds TSB, says: "By upping the interest we pay on our Plus accounts everyone will be able to make the most of their current account balance."
Moneyfacts, the data provider, says that the current account market is, like the savings market, getting more competitive as a result of the ongoing credit crunch.
Samantha Owens, head of personal finance at Moneyfacts.co.uk, says: “This move follows the trend of increased competition in the credit interest market, which is of course of benefit to consumers, although it follows the pattern of only offering these interest rates to those who can meet the regular funding requirement.
“The Plus account range will require customers to pay in at least £1,000 per month in order to receive this highly competitive rate.”
Owens says that Lloyds TSB is not alone in only offering the best deals to customers who have the funds. Other providers that follow this pattern include Nationwide, Halifax and Norwich and Peterborough Building Society.
“It appears that those who have the funds can benefit from better interest and better overdrafts, but are those that would benefit the most from these deals being excluded from the market?” she adds.
The current accounts boasting the top AERs all require monthly deposits of between £500 and £1,500, according to Moneyfacts:
|Current Account||AER||Funding Requirement||Balances over £2,500?|
|Abbey's Current Account (credit option)||8%||£1,000||Reverts to 2.5% AER|
|Coventry's First current account||5.6%||£1,000||Reverts to 0.95% AER|
|Halifax's High Interest current account||5.12%||£1,000||Reverts to 0.1% AER|
|Norwich & Peterborough's Gold current account||4.02%||£1,500||Reverts to 0.1% AER (over £5,000)|
|Source: Moneyfacts 9/06/08|