Fresh Club Lloyds current account offers 4% interest – should you sign up?
Update: six May 2015: Some of the account details have switched since the time of publication, but we have updated the story and the information below is correct as it stands. We also published our latest Banking Service Index in February 2015.
Lloyds is launching a fresh current account which offers up to 4% AER interest on balances of up to Ј5,000. But is it worth switching to?
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The fresh Club account, which is available online, in branch and by phone from Monday, substitutes the bank’s Vantage account, which offers tiered interest of up to 3% (see our Best Bank Accounts guide if you’re thinking of switching).
If you’ve got a Lloyds Vantage account, you won’t be automatically moved to Club Lloyds – you’ll have to ask Lloyds to stir. Vantage interest rates will be cut to 1.5% from July.
It’s the latest in a fresh wave of current accounts which are suggesting savers more attractive comebacks than those being seen on many savings accounts.
TSB’s fresh Plus account, pays 5% AER interest on balances of up to Ј2,000, is available online and by phone from Sunday and in branches on Monday (see our TSB Plus MSE News story to work out if it’s right for you).
Club Lloyds is open to both fresh and existing customers and offers up to 4% AER in-credit interest – so long as you pay in Ј1,500 each month and set up two direct debits.
If you don’t pay in Ј1,500/month, there’ll be a Ј5/month fee. If you pay in the Ј1,500/month but don’t set up the two direct debits, there’ll be no monthly fee, but you won’t be able to earn interest.
Here are the key features:
- Fee. No fee if used as main account, Ј5/month if not.
- Switching bonus. No switching bonus.
- Interest. It pays tiered 4% AER on balances of up to Ј5,000 – 1% on balances up to Ј1,999.99, 2% inbetween Ј2,000-Ј3,999.99 and 4% on Ј4k-5k. No interest is earned on balances above Ј5,000.
- What do I need to pay in? Pay in at least Ј1,500 each month (there’s a Ј5 fee each time you miss a month’s pay in).
- Direct debits and standing orders. At least two direct debits must be set up.
- Arranged overdraft cost: Up to Ј100 fee free, then Nineteen.94% EAR and Ј6/month fee
- Unarranged overdraft cost: Ј10 buffer, then Ј5/day under Ј25, Ј10/day for Ј25+ (max Ј80/mth), Ј10 unpaid item fees (max Three/day).
- Other benefits: Access to a monthly savings account which pays 4% interest on savings of up to Ј400/month and a mortgage rate reduction of 0.20%. Account holders can also pick one of three “lifestyle benefits” from the following: six cinema tickets a year, an annual magazine subscription, or access to discounts at more than 6,000 restaurants with an annual Gourmet Society membership.
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These days, there are many current account deals to choose from. But the two key incentives tend to be either a switching bonus, or in-credit interest. You need to work out which deal is best for you, depending on how much you can afford to deposit and whether or not you plan to use it as a main account for bills.
Our table shows how Lloyds’ fresh account fares compared to our best buys for those in credit. If you’re not in credit, or know you’re likely to dip into your overdraft, check both the arranged and unarranged overdraft fees on any account before applying.