Current accounts paying interest. Are they worth it?

RG2015

With Virgin Money increasing its current account interest rate to 2.02% AER today I was wondering whether any of these are now worthwhile. The best credit interest current accounts would yield the following additional annual interest (*) when compared with a Marcus easy access account paying 1.20%

Virgin Money, £8.00
TSB £4.35
Nationwide £11.70 for 12 months only
Santander -£2.00 net after deduction of £60 annual fee

In addition TSB, Nationwide and Santander have additional requirements such as direct debits and minimum monthly pay ins and also these figures assume the maximum balance is kept in the account.

(*) I have deducted the Santander annual fee which I know is not interest but nevertheless results in reduction in net income. I have no wish to debate this old chestnut again. 

Yorkshire_Pud

Virgin is 2% up to £1000 then no interest.

You didn’t say on how much in an account? £1000?

If so tsb £3 not £4.35?

Is it worth it? Well yes if you are out and about and want to spend some money using a debit card and get a bit of interest too.

phillw

RG2015 said:

I was wondering whether any of these are now worthwhile.

It very much depends on how you cost your time & the satisfaction you get from maximizing the money you extract from banks.

RG2015

Yorkshire_Pud said:

Virgin is 2% up to £1000 then no interest.

You didn’t say on how much in an account? £1000?

If so tsb £3 not £4.35?

Is it worth it? Well yes if you are out and about and want to spend some money using a debit card and get a bit of interest too.

Apologies. I am assuming that the maximum on which interest is paid is held in each of these accounts. VM £1,000, TSB, £1,500, Nationwide, £1,500 and Santander £20,000.
TSB is £1,500 x 1.49% (£22.35) less Marcus £1,500 x 1.20% (£18.00) giving a net gain of £4.35

phillw

TSB has always been worth it, if you didn't open two accounts when they had no direct debit requirements then you're not really in the game.
Nationwide is worth it for the first year, most people in the game will have already received their first year (as they used to allow you to renew it).
Virgin might be worth it if you want to tick all the boxes.
Santander isn't worth it.

If you're able to earn (for example) £300 an hour and have more work available than you have time to do, then none of them are worth it. You might gain enough satisfaction to outweigh the income you are losing but that is very much a decision that only you can answer.

wmb194

Yep, looks pretty marginal, but then one of the pros to having money dotted around in various current accounts is that you have a good backup plan and resources in place if you lose access to your main account e.g., through an IT meltdown or if Marcus decides to transfer next day rather than same day - it's very rare but it has twice happened to me.

RG2015

phillw said:

TSB has always been worth it, if you didn't open two accounts when they had no direct debit requirements then you're not really in the game.
Nationwide is worth it for the first year, most people in the game will have already received their first year (as they used to allow you to renew it).
Virgin might be worth it if you want to tick all the boxes.
Santander isn't worth it.

If you're able to earn (for example) £300 an hour and have more work available than you have time to do, then none of them are worth it. You might gain enough satisfaction to outweigh the income you are losing but that is very much a decision that only you can answer.

I saw that VM today increased the current account interest from 0.50% to 2.00% and thought that I should apply for one. I then "did the math" and saw that it would only yield me an extra £8 pa compared with the Marcus account at 1.20%.

I already have TSB (no DD requirement) but once it goes down to 1.50% tomorrow I may forego the extra £4.35 annual interest that my £1,500 will give me.

quirkydeptless

Hmm, shall I hang on and wait for a switching offer...

D3xt3r5L4b

What about Lloyd’s and the interest rates they currently offer?

RG2015

D3xt3r5L4b said:

What about Lloyd’s and the interest rates they currently offer?

Good question, and Bank of Scotland too which has the same deal although both have additional DD/pay in requirements.

Club Lloyds / BOS Vantage 
£4,000 @ 0.99% = £39.60
£1,000 @ 1.98% = £19.80
Total Interest = £59.40

Compared with Marcus
£5,000 @ 1.20% = £60.00

Bobblehat

RG2015 said:

D3xt3r5L4b said:

What about Lloyd’s and the interest rates they currently offer?

Good question, and Bank of Scotland too which has the same deal although both have additional DD/pay in requirements.

Club Lloyds / BOS Vantage 
£4,000 @ 0.99% = £39.60
£1,000 @ 1.98% = £19.80
Total Interest = £59.40

Compared with Marcus
£5,000 @ 1.20% = £60.00

One difference between the choice of those two that might be worth mentioning ….. I am looking for a new feeder account for multiple RS's (as Charter EA is dropping), Lloyds CA (or BOS) could be used to set up automatic SO's … Marcus can't, I'd have to do them manually each month …. yuck! CL/BOS needs 2 DD's though.