Lloyds Bank’s new ‘Club Lloyds’ account is the latest competitive intervention in the reviving market for current accounts.
Club Lloyds account holders will benefit from interest rates of 4% on balances up to £5,000. Account holders are required to pay in £1,500 a month and set up two monthly direct debits. Alternatively, customers may pay £5 a month to hold the account.
Club Lloyds interest rates are tiered, with customers receiving 1% interest on balances up to £1,999.99, 2% interest on balances between £2,000 to £3,999.99 and 4% interest on balances of £4,000 to £5,000.
They will also have access to a monthly savings account which pays 4% interest on savings of up to £400 each month, a mortgage rate reduction of 0.20% and ‘lifestyle benefits’, including six cinema tickets a year, an annual magazine subscription or access to an annual Gourmet Society membership.
The account is available from March 31.
Go further: Bank account reviews – our pick of the best bank accounts for those who stay in credit
Current accounts now outperforming savings
The new account follows the recent unveiling of the TSB Plus Account – offering up to 5% interest on deposits up to £2,000. It becomes the latest current account offering rates of return which challenge the savings account market, where sub-1.5% rates of interest on instant access accounts remain the norm.
Other tempting current accounts include Nationwide’s FlexDirect account, which offers 5% interest for just 12 months on balances up to £2,500, albeit with a fee-free overdraft. Nationwide does not charge a monthly fee on its current account, but the interest rate reverts back to 1% after 12 months. Customers are required to pay in £1,000 per month in order to receive interest.
Santander’s 123 account offers 3% interest on balances of up to £20,000, so may still be the best option for those with large balances.
Go further: Best Rate savings accounts – see how the savings account market compares to these deals
Switching for more competitive rates
It seems that the introduction of reforms to make switching easier is encouraging banks to compete more fiercely for our deposits and customers to seek better deals.
Yet, Which? research indicates that of those who do not switch, some 68% are not even considering switching.
Go further: Current account switching – our advice on how to switch current accounts