Rates for current accounts fall

06/08/2009

New research has revealed that rates of return among UK current accounts stand at zero for around half the products on the market.

The Moneyfacts Group said that this total has shot up from 19 per cent a year ago.

Meanwhile, the number of accounts paying an interest rate of 0.1 per cent or less now stands at 83 per cent of the market - an increase from 2008's total of 57 per cent.

Moves on interest rates from the Bank of England, which has cut its own rate to an all-time low due to the credit crunch, were blamed for the collapse in current account returns.

Commenting, Kevin Still, EuroDebt director, said: "For people in financial difficulty the prospect of earning interest on a current account, even if it is offered, is fairly remote. Costs of overdrafts are rising and many banks are looking to reduce risk exposure where accounts are permanently overdrawn. We would recommend that consumers look to switch to better deals, it is one of the reasons we launched our bank switching website at www.bankswitching.co.uk.

"There is a need for a simple, no surprises current account that is eligible to all UK residents without the need for credit checks. Monthly fees are totally transparent and there are no penalties for failed direct debits or standing orders. The account is available to people on or considering a Debt Management Plan or an IVA. People subject to bankruptcy are also eligible."

The Bank of England held its rate at its current level of 0.5 per cent for another month today.

Tags; Debt Management and Banking, Young Family Finances, Credit Card Lifestyle, Recent Graduate Debt,

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