The last bastions of decent interest rates - high interest accounts - are disappearing fast. Lloyds, First Direct, HSBC, M&S and TSB have all followed Santander's lead and decided to cut their rates, either immediately or in the next few months. Plus Halifax has also slashed its monthly reward.

"So where can I get decent rates?" we hear you cry. There's no great solution, so we've crunched the numbers to tell you exactly what you should do. But before you start, if you have debts you're paying interest on, it's usually better to repay debts before saving.

  • Is your bank slashing interest? Here are the key changes so far:

    - Club Lloyds - 4% to 2% on up to £5,000. From 8 Jan
    - First Direct regular saver - 6% to 5%. Already happened
    - Halifax Reward - £5/mth to £3/mth. From 1 Feb
    - HSBC regular saver - 6% to 5%. Already happened
    - M&S Bank regular saver - 6% to 5%. Already happened
    - Santander 123 - 3% to 1.5% on up to £20k. From 1 Nov
    - TSB Classic Plus - 5% on max £2k to 3% on max £1,500. From 4 Jan

  • The ones that haven't changed. Bank of Scotland Vantage, which pays 3% on up to £5,000; Tesco which pays 3% on up to £3,000; and Nationwide's FlexDirect, which pays 5% fixed for a year on up to £2,500, all tell us they have no plans to cut their rates at the moment.

    These are the headlines - for full details see bank-by-bank changes. But Martin's view is: "Saying 'no current plans to cut rates' doesn't mean it won't happen. Nationwide is most likely not to cut rates, as its high interest rate only lasts a year - so the cost to it is capped. Yet with all three I think there's still a plausible chance they'll follow the trend within the next few months."

  • Hit by the recent cuts? Don't automatically close your account in anger. Although you may be furious at your bank, and want to ditch the account to punish it, try to be logical. As long as the account is right for you now, and you chose it for the right reasons, it'll still be the right one until the rates change. So our message is...

    Don't make a decision until your bank rate actually changes.


    After all the cuts, which account should you get?

    We've worked out the best accounts for everyone AFTER the rate changes take effect. And of course we'll reassess these accounts again later, because others may also change. All these current accounts credit-check you when you apply, and all have £75,000 UK savings protection.

    1. Santander 123 wins for those with savings above £10,000 unless you want to repeatedly switch.
    From Tue 1 Nov the Santander 123* rate drops from 3% to 1.5% AER variable on up to £20k. There's a £5/mth fee, but we'll assume this is covered by the up-to-3% cashback on bills (£500/mth min pay-in), as our polls suggest it is for most people, and more.

    It still wins for people with savings above about £10,000 who don't want to switch every year, and even if you're prepared to move, it still beats anything for savers with more than about £15,000.

    In a couple? You can earn 1.5% on a huge £60k by opening 3 accounts.

    Martin Lewis
    Get Our Free Money Tips Email!

    2. M&S Bank and Co-op Bank are winners for most savers willing to switch again in a year. These current accounts don't pay savings interest, yet the switch bonus is such that they'll beat anything for savers with less than £15,000 over the course of the first year. To really max your savings, drip-feed from them into their linked regular savers.

    • Switch to M&S Bank* for a free £100 M&S gift card + additional £10/mth added whenever you pay in £1,000/mth for the first year. There's also a 5% fixed linked regular saver on up to £250/mth and £100 0% overdraft. Who can get it? You must switch 2 direct debits.

    • Co-op Bank* pays switchers £150 + up to £5.50/mth. You need to switch 4+ active direct debits, plus sign up to its Everyday Rewards scheme and jump through a few hoops to get the monthly extras. No min pay-in for the £150 but it's £800/mth (equiv £9,850 salary) for the extras. Note, rewards can change with 30 days' notice.

    • Ends soon. Free £200 (£150 upfront, £50 if you stay). Switchers to HSBC's Advance* account who apply by Sun 30 Oct and switch a min two direct debits or standing orders get £150. Register for online/mobile banking and if you're with it after a year and have paid in a min £1,750/mth (equiv £26,300 salary) for at least 9mths, you get another £50. You can save up to £250/mth in its linked 5% fixed regular saver, plus it has a 6mth 0% overdraft.

    • £100 + no.1 service bank account. First Direct* might not offer the biggest switch bonus but it's won every customer service poll we've done, with 91% rating it 'great'. Also it has a £250 0% overdraft and you can open a linked 5% fixed regular savings account where you can save up to £300/mth. Just ensure you pay in £1,000/mth to avoid the £10/mth fee.
    3. Bank of Scotland is a winner if you've up to £10,000 and don't want to switch (unless it cuts its rates). Open a Classic Account with Bank of Scotland and you get 3% AER variable on up to £5,000 as long as you have at least £3,000 in it (max £148/yr). Put anything between £5k-£10k in a top savings account, see points 7 & 8.

    4. Disappointed Halifax Reward customer, but want ongoing rewards?
    When Halifax cuts its rewards from £5-£3/mth in Feb, consider the Co-op Current Account mentioned above, which pays up to £5.50/mth rewards, and as a one-off bonus gives you £150 to switch.

    If you've bills that you pay by direct debit though, it's possible to get higher ongoing monthly rewards with the NatWest Reward* account. It has a £3/mth fee, but pays 3% cashback on qualifying bills. Or there's the Santander 123 Lite account, which costs less at £1/mth but only pays up to 3% on qualifying bills, and has a £500/mth min pay-in.

    As a rule of thumb both will beat Co-op and Halifax's monthly rewards if you spend more than £350/mth on qualifying bills, and unless you have a Santander mortgage, the higher cashback on the NatWest account will mean it wins overall.

    5. First Direct or Nationwide win if you're often overdrawn. An overdraft's a debt like any other, so if you often go into the red, cutting its cost makes it easier to clear. And if you ever bust your limit it'll wipe out any gains made from savings, so always look for the largest overdraft available. Full info & more ways to save in Cut Overdraft Costs, but in brief...

    - Under £350 overdraft? Switch to 0%: First Direct* has a £250 0% overdraft, but also currently gives £100 to switchers, so that'd instantly clear some. Providing you can meet its min £1,000/mth pay-in (equivalent to £13,100 salary), nothing beats it.

    - Larger limit possible but not certain: Nationwide's FlexDirect* may give a bigger 0% overdraft, but only for a year (50p/day after, so aim to clear before). The overdraft limit you get depends on your credit score. As Bigbossblues told us: "I received a £2,100 limit, saving me £36 a month on my Lloyds overdraft for 12 months".

    Savings in crisis
    Halifax Reward, Club Lloyds, Santander 123, TSB Classic Plus are all wielding the axe
    6. Save every month and you can get 5%. As mentioned in point 2, several current accounts come with linked high-interest regular savings accounts, allowing you to save up to £500 each month. The top picks are First Direct, HSBC and M&S Bank, all paying 5% AER fixed for a year, and Nationwide, paying 5% AER variable. For more, see Regular Savings.

    7. Open more accounts and get high interest on them all.
    Don't feel you need to close your existing account to get some of the ones above. Simply split your cash between the best, and that way you can save even more money at these high rates. Here's how to do it:
    • Open a new account. But, crucially, don't use the switching service. This is because if you do it'll automatically close your old account.
    • Make sure you can meet the number of standing orders or direct debits that the new account needs. If you need to transfer these across from your existing account, do it manually.
    • Arrange to meet any pay-in or other criteria the new bank has. Most will require a minimum pay-in per month. Some will also need you to jump through other hoops, like registering for internet banking, paperless statements or staying in credit.
    Once open, just pay the spare cash you need to save into the new account, meet its criteria, and you'll start earning interest.

    Become a bank savings tart and save £37,000 at over 2%

    Some people have six or seven accounts and siphon money between them using standing orders to meet all the minimum pay-ins. We've worked out that if you max out these accounts on savings, you could save £37,000 at an average 2.16%:

    - Santander: 1.5% on £20k = £298 (if cashback covers £5/mth fee)
    - Bank of Scotland: 3% on £5,000 = £148
    - Nationwide: 5% on £2,500 = £122.25
    - Club Lloyds: 2% on £5,000 = £99
    - Tesco Bank: 3% on £3,000 = £88.80
    - TSB: 3% on £1,500 = £44.40

    Are you a bank savings tart? Let us know how you do it.

    8. Get up to 1.95% fixed or 1.1% easy access in a normal savings account. There are still options, though rates are spitworthily low.
    • If you're a first-time buyer, the Help to Buy ISA is a no-brainer, as you can save for a mortgage deposit with the incentive of the state adding 25% on top of what you save (max £3,000).

    • The best easy-access rates are currently with cash ISAs where you can get 1.1% AER.

    • If you've used your ISA allowance then top easy-access savings pay 1%, or you can boost these rates by locking your money away in fixed savings - the top one-year fix pays 1.4%, and you can increase this to 1.6% if you fix for three years, or 1.95% for five years.

    • Or you could try premium bonds which have a 1.25% 'interest rate', though most won't win anything like that much.

    This article first appeared in the MoneySavingExpert.com weekly email on 19 October.

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