Club Lloyds savers braced for interest rate change, while TSB rate cut also takes force

Lloyds bank

Savers with a Club Lloyds current account will see their monthly interest slashed when new rates come into effect this weekend.

Lloyds Bank announced a change in interest rates on its flagship Club Lloyds current account last October, and the bank has confirmed these new terms will be introduced on Sunday 8 January.

From this date, account holders will receive 2% interest payable on balances up to £5,000. At the same time the monthly account fee will drop to £3 from £5. Previously account holders were paid tiered interest of up to 4% on balances between £1 and £5,000.

 

The move affects all Club Lloyds branded accounts, including those no longer on sale.

TSB Classic Plus rate cut

Elsewhere, TSB customers with a Classic Plus account are also receiving less interest than before. Changes to this account took effect on Wednesday 4 January, and mean customers now receive 3% interest on balances up to £1,500. Previously this account offered 5% interest on balances up to £2,000.

However, new customers who opened this TSB account on or after 1 June 2016 will continue to receive 5% cashback on contactless purchases until 30 September 2017.

Halifax and Bank of Scotland to slash rewards

Customers with a Halifax or Bank of Scotland Reward Current Account will see their monthly reward lowered from the start of next month.

From 1 February, the reward will be reduced from £5 to £3. The same change also applies to the fee-paying Ultimate Reward Current Account.

Moneywise verdict

Those using current accounts as a vehicle for their savings will be disappointed to see these interest rate changes come into force.

For those looking to switch, Nationwide’s FlexDirect account pays a higher 5% interest on balances of up to £2,500. However, this is a 12-month bonus only, and will drop to just 1% interest after a year.

For those with larger balances, the Santander 123 Current Account may be worth considering. It pays 1.5% interest on balances up to £20,000, although there is a £5 monthly charge.

Despite interest rates being cut, current accounts still boast better returns than the top easy access savings account – the Post Office Online Saver. This offers savers 1.01% interest, including a 0.76% bonus for the first year.

 

Published: 06 January 2017
Last updated: 06 January 2017

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