How to earn a risk-free 11% return on your money

How to earn a risk-free 11% return on your money

Current accounts could be a 'salvation for savers' hit by record low interest rates, according to new research from financial data site Moneyfacts.

It found some of the top current accounts are offering the equivalent of almost 11% interest (based on £2,000) over a year once you factor in the various rewards on offer.

In contrast, the average easy access savings account would deliver just 0.46%, which equates to a miserly £9.20 after 12 months.

How to get an 11% reward

Moneyfacts analysed the top current accounts that offer things like switching bonuses and other cash or gift card incentives and found out what these rewards equate to as percentage based on £2,000. The results are shown in the table below.

Current accounts*Type of reward gained Cash earned in 1st yearEquivalent interest rate (based on £2,000)
M&S Bank Current Account£100 (gift card switch) + £10pm (gift card)£22011%
The Co-operative Bank Current Account£150 (switch), up to £4pm + £1.50pm on debit card spending£21610.8%
HSBC Advance Account£150 (switch) + £50 after 12 months£20010%
Halifax Reward Current Account£100 (switch) + £5pm reward£1608%
first direct 1st Account£100 (switch)£1005%
Barclays Bank Account with Blue Rewards£4pm**£482.4%

Source Moneyfacts

*Accounts may require minimum funding or other requirements (e.g. online banking).

**Cash received after monthly fee of £3 taken – more rewards available if certain Barclays products are held.

The analysis highlights just how much money you can earn in the first year with a current account.

What's more, you don't have to be a saver to get the top rewards. These incentives are paid for switching and using the account to spend money.

Rachel Springall, press officer at Moneyfacts, said: "Savers and spenders should definitely consider using a current account as a way of getting something a little extra, particularly with savings rates plummeting to record lows."

The best high-interest current accounts

The Moneyfacts analysis looks at how cash incentives and other cash rewards accumulated throughout the year can equate to a decent reward.

However, you don't actually have to save anything to get this 'return', just meet the eligibility criteria and monthly funding requirements.

If you're looking for a decent home for your savings, there are a range of other high-interest current accounts that are a real alternative to traditional saving accounts offering miserly rates.

The Nationwide FlexDirect pays 5% on balances up to £2,500 for 12 months while the TSB Classic Plus pays 5% on balances worth up to £2,000 indefinitely.

The next best offer comes from Lloyds Bank. The Club Lloyds account pays 4% on balances between £4,000 and £5,000, but you need to be able to put £1,500 a month in to avoid the £5 monthly fee.

The Santander 123 Current Account is also a good bet for those with larger balances. It currently pays up to 3% on balances between £3,000 and £20,000. However, from November 1 the rate is being adjusted to 1.5% on balances up to £20,000. The account also has a £5 monthly fee.

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