TSB to cut Classic Plus current account interest to 1.5%
TSB is to cut the interest on its Classic Plus current account from 3% AER to 1.5% AER from May.
The bank upped the interest rate from 3% to 5% on balances of up to £1,500 in May 2018 while it was affected by a number of IT problems, but dropped it back to 3% last July.
And this will now drop down further to 1.5% from 2 May 2020, meaning customers will get maximum interest of just over £22 a year on balances up to £1,500.
To get the full interest, customers must pay at least £500 a month into their current account, register for internet banking and opt for paperless statements and paperless correspondence.
Compare the Best Bank Accounts using our guide.
Which is the best current account for interest?
With its 3% interest deal, TSB was one of our top picks for current account interest. Yet it's behind Nationwide, which pays 5% interest on up to £2,500 to new customers of its FlexDirect account.
The interest is paid monthly and you can only earn it if you haven't had a FlexDirect account before and pay in at least £1,000/month (equivalent to a £12,500 annual salary).
But remember, you'll only get this top rate for a year – after that it drops to 1%, so you should look elsewhere then to see if it can be beaten.
If you already have (or have had) the Nationwide account, Lloyds and Bank of Scotland currently offer accounts paying up to 2% interest, though this is only on a portion of your balance, not the whole amount. For more information, see interest-paying current accounts.
What does TSB say?
TSB director of everyday banking products Craig Bundell said: "We've reviewed our rates, as we do regularly with all our products, to make sure they're sustainable and give our customers a competitive interest rate as part of our current account offer. This new rate remains one of the best in the market."
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