A bank with millions of customers will no longer offer interest payments on current accounts from today, February 10. Digital bank Starling Bank had previously offered a 3.25% interest rate on current account balances up to £5,000, which would have resulted in an annual return of £162.50.
However, this perk is now being phased out, with Starling having informed all current account holders about the change back in November. In lieu of this, the bank – which had 3.6 million customers as of a 2023 assessment – has introduced a new 4% easy-access savings account, which could generate £204 in interest over a year for a balance of £5,000.
This new savings account is linked to the standard Starling current account. However, this rate is variable and can change.
There are also better rates currently available elsewhere. At present, cash ISAs offer higher returns than easy-access accounts.
Trading 212 currently offers the best cash ISA rate at 5.03%, while Coventry Building Society and Atom Bank offer the highest rate for regular easy-access accounts at 4.85%, according to the Mirror. Regular savings accounts typically offer even higher returns, although there are usually limits on how much you can deposit each month.
For example, Principality Building Society offers a fixed 8% rate for six months on deposits up to £200 per month.
Starling Bank has announced changes to its banking services. A spokesperson for the financial institution declared: “We continually keep our products under review and have taken the decision to remove current account interest from February 10, 2025 Over the last couple of weeks we have notified all customers of the new current account terms and conditions in the Starling app.”
The spokesperson also reassured account holders, stating: “Customers will still benefit from fee free spending abroad and 24/7 customer service.”
This adjustment arrives on the heels of the Bank of England cutting its base rate down to 4.5% from 4.75%, a figure that massively influences savings returns – with the highest rates currently even outpacing the inflation rate, cited at 2.5%. With potential dips ahead, savers are urged to take decisive action.
AJ Bell’s personal finance director Laura Suter said: “Average rates have fallen in the past year and lots of people will be earning piddly amounts on their savings. Even if you took action to switch accounts during the period of high savings rates, if it’s been more than a year since you moved accounts you might find the rate you’re getting has plummeted and you need to ditch and switch again.”
Similarly, Sarah Coles, head of personal finance at Hargreaves Lansdown, warned of future drops, saying: “More falls for fixed rates will come, once the market is convinced that more cuts are on the way. At the moment, it looks like this is some way off, especially with tariff dramas fuelling unease over inflation.
“At times like this, it’s easy to be bamboozled to a full stop, unsure as to whether rates will rise again before they fall. However, it if you hang on, in the interim you could be missing out on some rewarding deals – especially over slightly longer periods. Rather than waiting for the best possible moment to fix, it makes sense to take advantage of the best deals while they last.”
