TSB and Lloyds to slash interest rates on current accounts
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Version 0 of 1. Interest rates available on current accounts are to plummet, after Lloyds and TSB both announced they would follow Santander in slashing the returns on their highest-paying accounts. A day after Lloyds announced it was halving the top rate available on its Club Lloyds account from 4% to 2%, the top-paying current account from TSB has has also been cut. TSB’s Classic Plus account will no longer offer a generous 5% on balances up to £2,000 from 4 January 2017. Instead it will pay 3% on balances held up to £1,500. This means, instead of earning a potential £100 in interest a year, savers will earn just £45. The Lloyds change also comes into force next January. High-paying current accounts have been used by banks to attract new customers in recent years. Facing terrible rates from traditional savings accounts, consumers have moved their money into current accounts to take advantage. A Lloyds Banking Group spokesman said: “These changes follow a review of our full current account range, taking into consideration changing market conditions. We believe these changes ensure that the products remain both attractive to customers and competitive in the market.” TSB said: “We will be writing to our affected customers giving them two months notice, during which time they will continue to benefit from the current rates and applicable balances.” The move, which has been announced less than two months after Santander announced a rate cut on its hugely popular 123 account, is another setback for savers. Santander’s account is the most popular of these high-interest deals, with more than 4 million account holders. Nationwide still offers 5% on a slightly larger balance of £2,500 for Flex customers. However, this is only for the first 12 months. Savers could earn up to £125 in that year. At least £1,000 must be paid in each month and two direct debits must be set up. Andrew Hagger, of financial website MoneyComms, said: “High interest current accounts have proved extremely popular with disgruntled savers over the past couple of years but now many will be disappointed and frustrated, as yet another 100% safe opportunity to earn a reasonable rate of return is being withdrawn – they must wonder if the savings nightmare will ever end.” Hagger said that for Santander customers, who will see the rate cut from 1 November, the question was “whether to stick or twist – the answer is not as straightforward as yes or no, as it will depend not only on your average credit balance but also whether you take advantage of the 123 cashback option on household bills paid by direct debit.” |