Interest rates on Club Lloyds and Bank of Scotland Vantage accounts to be slashed

If you're a Club Lloyds or Vantage account customer, then from 1 October 2020:

• You'll earn 0.6% AER interest on balances between £1 and £3,999.99. This is reduced from the 1% you earn now.

• You'll earn 1.5% AER interest on the part of any balance between £4,000 and £5,000. This is reduced from the 2% you earn now.

This means that on a balance of £5,000, the effective overall interest rate will be around 0.8%, compared to 1.2% at the moment.

And the maximum amount of interest you can earn annually on the accounts will drop by £20.50, from £59.40/year to £38.90/yr.

For Lloyds, you to pay out two direct debits each month to get the interest and you need to pay in £1,500+/month to avoid a fee of £3/mth, though this is waived for everyone in July and August.

For Bank of Scotland, you need to get the free Vantage add-on to your current account and pay in £1,000+/mth to get the interest. You'll also need to pay out two direct debits each month.

For the current best-buy bank accounts, including 2% interest on £1,500 fixed for a year, see our Best Bank Accounts guide.

Can the new rates be beaten?

The new interest rate will be easily beaten by the current top-paying easy-access savings account from NS&I, which pays 1.16% AER interest.

If you want to really max the interest you earn, other top-paying current accounts pay higher interest rates than Lloyds and Bank of Scotland or easy-access savings. This includes 2% on balances of up to £1,500 for a year with Nationwide's FlexDirect account (though only 0.25% after) and 2.02% on balances of up to £1,000 with Virgin Money.

But as these accounts only pay interest on balances up to a certain amount, for larger savings you'll be better off moving the rest into a top easy-access account.