Alliance and Leicester (A&L) will up the credit interest rate for new customers on its Premier Direct account on Monday.

Therefore, from next week, it will be our top-pick account for those regularly in-credit with an annual salary below 14,700.

You'll get a fixed 6% before tax on the first 2,500 in the account, instead of the current 5%, if you deposit at least 500 a month. That's equivalent to a 6,050 annual salary.


This rate is higher than any standard or fixed savings account at present, but obviously only on a limited balance.

The reward on the Abbey Preferred In-Credit account will also rise from 5% to 6% fixed for new customers on the first 2,500 from Monday. However, you must deposit at least 1,000 a month.

The A&L account is the better of the two because you also get a 12-month 0% overdraft. After that, you pay 50p per day you're overdrawn, up to a maximum 5 per month.

... which then dives

On both accounts, you only get the 6% credit interest rate for 12 months, after which it plummets to 1%.

In theory, a basic rate taxpayer could earn 120 a year after tax from either account but they'd have to maintain a 2,500 balance throughout, which is unrealistic.

At a more sensible 1,000 average, a basic rate taxpayer would earn 48 a year on either.

Therefore, both accounts can be beaten by the Halifax/Bank of Scotland Reward account, which pays 5 a month after basic rate tax, or 60 a year. However, you have to pay in 1,000 a month, meaning you'd need to earn at least 14,700 a year.

Top pick overall

The First Direct 1st Account pays a 100 sign-up bonus, making it our overall top account for those in credit, though you need to pay in a salary of at least 23,300.

Yet as the Halifax/Bank of Scotland account pays 5 every month, and not just for a year, it's best for those regularly in credit who want long-term value.

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