The Bank of Scotland is cutting the headline interest rate on its current account 'Vantage' add-on from 3% to 2% in June, MoneySavingExpert.com can reveal - meaning you'll no longer be able to save £15,000 at 3% interest.

Currently customers who add the Vantage feature to their accounts benefit from a tiered interest rate system on credit balances, getting 1.5% AER on balances of £1 to £999.99, 2% AER on £1,000 to £2,999.99 and 3% AER entire balances between £3,000 and £5,000.

If you add the feature to a Classic Account it's actually possible to save £15,000 at 3% via a trick we've featured in the weekly email - crucially, Bank of Scotland allows customers to open THREE accounts, so if you open all three you can boost your returns.

However that's being scrapped in favour of a flat rate of 2% on all balances between £1 and £5,000. The move means those with smaller savings will earn more interest, but bigger savers will see their earnings cut.

Martin Lewis
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The changes will apply to both new and existing Vantage customers from 11 June, and the bank is now writing to affected customers to warn them.

Classic Account customers are able to add the Vantage feature and benefit from interest on credit balances as long as they pay in £1,000/mth, stay in credit, and have two different direct debits paid from each account each month.

The feature can also be added to the paid-for Platinum account, as well as number of legacy accounts no longer open to new applicants.

I'm a Vantage customer - how does this affect me?

The table below shows how your interest earnings will change after the new rate comes in.

Bank of Scotland Classic Account with Vantage annual interest
Interest (AER)/rewards
Amount in account
£500 £1,500 £3,000 £5,000 £15,000 (with 3 accounts)
Now 3% if you've £3k-£5k, 2% if £1k-£2,999, 1.5% under 1k £7.50 £30 £90 £148 £444
From June 2017 2% on up to £5k (entire balance) £10 £30 £60 £99 £297

How will the Bank of Scotland account compare after the rate cut?

Once the rate cut comes into force, the Bank of Scotland account will pay the same interest as the Club Lloyds account, which also offers 2% on balances up to £5,000. Club Lloyds has a higher minimum pay-in though - £1,500/mth, and a charge of £3/mth if you miss it - and doesn't allow you to open three accounts.

For bigger savings, the Santander 123 account pays 1.5% on up to £20,000, which for many could still be a winner. There's a £5/mth fee, but for many the cashback on bills it offers will offset this.

For those with smaller savings, the highest payer for balances of up to £2,500 is Nationwide Flexdirect at 5% - but this rate is only for a year. Next in line is TSB Classic Plus, which pays 3% on balances up to £1,500. As of today Classic Plus now also offers up to £10/mth cashback (£5/mth for 20 debit card transactions, and another £5/mth for two direct debits).

We're still waiting to see if Tesco Bank will reopen applications for its popular current account which pays 3% interest on up to £3,000 - this rate was guaranteed until April 2019 and you could open two of them. Last month Tesco Bank suspended applications for this account after receiving 60,000 in four days.

See our Best Bank Accounts and Top Savings Accounts guides for a full rundown of our top picks.

What does the Bank of Scotland say?

In a statement the Bank of Scotland said: "These changes follow a review of our current accounts, taking into consideration changing market conditions. We believe these changes ensure that Vantage remains both attractive to customers and competitive in the market.”

Additional reporting by Karl Talbot