High Interest Bank Accounts FAQs
What is a high interest bank account?
Some current accounts pay a certain level of interest on balances held within the account, but a few offer a higher than standard rate of interest. High interest current accounts are usually only offered to people who can meet certain conditions for opening these accounts. These can include minimum amounts paid into the account each month, minimum balances held in the account or a minimum number of direct debits set up.
However, the criteria will differ depending on the account, and some charges and fees may apply, so check with each provider before making any decisions.
Who might want to take out a high interest bank account?
If you want to earn more interest on your current account balance and can meet the criteria, you may benefit from a high interest current account. It is possible to earn more in interest from high interest current accounts than through some savings accounts if you meet the conditions of the account provider and choose the right account for you. There are also usually limits on the balance on which the higher rate of interest is paid.
Will I be taxed on my interest earnings?
You may be. Taxpayers are able to earn up to a certain amount in interest without paying any tax on these earnings, but if you exceed these limits, you may be taxed.
Can anyone open a high interest bank account?
No. Higher interest paying bank accounts usually come with certain conditions that the consumer needs to meet in order to qualify for the account. These conditions vary from account to account, but some of the commonly required conditions include:
- Minimum paid in each month
- Minimum number of direct debits required
- A limit on the balance upon which the higher rate of interest is paid
- A limit on the time the higher interest is paid (such as the first year, for example)
- Account must remain in credit
- Fees may be charged
How do I apply for a high interest bank account?
Applying for a high interest current account will usually involve proving your identity, your address and your credit history. Checks will be run on whether you are able to meet the minimum criteria, such as paying in a minimum amount each month and setting up several direct debits.
Can I switch my account to a high interest account?
If you meet the minimum criteria for a high interest account, either with your current bank or with a different bank, it is usually possible to switch relatively easily. Most banks will do much of the legwork for you as they are happy to welcome you as a new customer.
