Interest rates on Club Lloyds and Bank of Scotland Vantage accounts to be slashed
Lloyds and Bank of Scotland customers will earn less interest on Club Lloyds and Vantage accounts from October.
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.