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Bank of Scotland cuts interest on its Vantage account: should you switch?

Find out which banks offer the best high-interest current accounts

Bank of Scotland has become the latest provider to cut the interest rate on its bank account, following Lloyds Bank and Santander.

From this Sunday (11 June), customers with ‘Vantage’ current accounts will see the top rate fall from 3% to 2%.

Previously, current accounts with Vantage – a free upgrade to Bank of Scotland’s Classic, Silver, Platinum, Gold or Premier Accounts – earned 1.5% on balances of £1 to £999.99, 2% on £1,000 to £2,999.99, or 3% on entire balances between £3,000 and £5,000.

The bank will scrap this tiered system and replace it with a flat interest rate of 2% AER on credit balances between £1 and £5,000.

For account holders with smaller savings, this could mark a slight improvement, but savers with larger balances will lose out.

Balance £500  Balance £1,000 Balance £3,000 Balance £4,000 Balance £5,000
Old interest rate £7.50 £20 £40 £130 £150
New interest rate £10 £20 £40 £80 £100

Is Vantage still a good deal?

Many savers are turning to high-interest current accounts to maximise their returns.

  • Nationwide pays the top rate of 5%, but this is limited to balances of £2,500 and drops to just 1% after one year.
  • Tesco Bank has promised to keep its rate at 3% on balances up to £3,000 until April 2019.
  • TSB Classic Plus also pays 3%, but only on balances up to £1,500.
  • Bank of Scotland Vantage now matches Club Lloyds, paying 2% on balances up to £5,000.
  • Santander 123 only pays 1.5%, but this rate applies to balances up to £20,000 – a winner for larger balances (and the £5/month account fee is typically offset by cashback rewards).

The chart below compares returns for each of these accounts, based on different balances.

Juggling multiple current accounts

Opening a number of high-interest current accounts and moving money between them can maximise savings.

There are fees, minimum funding rules (ranging from £500 to £1,500 per month), direct debit requirements (some banks insist that you have at least three direct debits coming out of your account), and restrictions on the number of accounts you can open to consider.

Bank of Scotland has confirmed to Which? that customers can still hold a maximum of three accounts to maximise their interest, which can be any mixture of joint or sole accounts.

Account AER Max. balance Monthly pay-in Direct debits Max. no of accounts Customer score
Bank of Scotland Vantage 2% £5,000 £1,000 Two Three 62%
Club Lloyds [a] 2% £5,000 £1,500 Two Two (if one is joint) 62%
Nationwide FlexDirect (year one) 5% £2,500 £1,000 None Two (if one is joint) 77%
Nationwide FlexDirect (year two+) 1% £2,500 £1,000 None Two (if one is joint) 77%
Santander 123 [b] 1.5% £20,000 £500 Two Two (if one is joint) 62%
Tesco Bank Current Account 3% £3,000 £750 Three Two 70%
TSB Classic Plus 3% £1,500 £500 None Two (if one is joint) 67%

[a] Club Lloyds costs £3 in any month you don’t pay in £1,500

[b] Santander 123 costs £5/mth (£60/year) but this can be offset by 1-3% cashback on household bills (worth 1% cashback on Santander mortgages, council tax and water bills, 2% cashback on gas and electricity bills and 3% cashback on TV and telecoms bills)

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