Survey: Huge differences in interest offered on current accounts

A new survey by MoneyExpert.com shows that current accounts at most UK banks are not keeping up with interest rates increases as they are being issued by the Bank of England. Since October of 2006, average interest rates paid on current accounts have gone up by 0.29 percent to an average of 1.84 percent. Forty-seven accounts actually offer an interest rate of less than 1 percent, two more than the 45 accounts that offered less than 1 percent interest last October. During the same period the Bank of England has hiked rates by 0.5 percent, to 5.25 percent.

MoneyExpert chief executive Sean Gardner points out, however, that there are better offers out there and that it is easier to switch accounts than it ever has been before. The website, which compares prices on financial products, says that Bank of Scotland and Halfax, both owned by HBOS (LSE: HBOS), pay six percent interest, while Alliance & Leicester (LSE: AL) pays 10 percent on its Premier 21 account for customers age 16 to 21.

Mr. Gardner says that figures gathered by MoneyExpert show that about 12,700 people switch current accounts each day. These changes are made simpler than ever by banking code rules that require an existing current account provider to transfer details of standing payment orders and direct debits to a new account provider within three business days of the change in accounts.

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