A current account can be a great way to earn extra bucks as they sometimes offer inflation-beating interest rates, but some of the best deals are reserved for those on salaries of at least £21,500 a year.
In fact, providers are setting minimum monthly deposits requirements as high as £1,500 in order to unlock benefits like interest and cashback, consumer champion Which? has found.
If you earn less than this per month, you can still pick up beneficial deals, but they're often not as good.
Gareth Shaw, Which? money expert, told The Sun: "Many banks offer eye-catching perks on their current accounts such as cashback and interest, but often these can only be unlocked by those who earn above a certain threshold.
"It's important to pay close attention to the small print on the top accounts to ensure your monthly income is enough to allow you to take advantage of the full range of benefits on offer."
The Sun has also asked a few experts whether they think paying higher interest rates to people with a better income is fair, and a majority of them said it isn't.
Virraj Jatania, CEO and founder of Pockit, a challenger bank for the UK’s financially underserved, told The Sun: "High-street banks often save their best rewards for richer customers, meaning that everyone else misses out – even though they’re just as loyal, and work just as hard for their savings."
Meanwhile, James Daley, managing director of consumer champions Fairer Finance, told us: "It’s definitely not particularly fair, given that the average household has savings of around £2,500 and that the best rates are reserved for people on tens of hundreds.
"In pounds and pence, it wouldn’t cost them a lot to offer these kind of rates to value savers.
"And from a fairness perspective, it feels like the right thing to do.
"In this ultra-low interest rate environment where savers have suffered from just one per cent interest rates on their savings accounts in the last decade, it seems to be a bit of an insult that to get a better rate you’ll need to have hundreds of thousands of pounds, which most of us will never have."
Rachel Springall of Moneyfacts told us: "Clearly those customers with a guaranteed income tend to be offered more perks, which will be disappointing news for consumers with a small income, for example those who are a full-time parent and want their own account."
"It would be great to see the market adapt and open up current accounts with perks to more people."
But Andrew Hagger of Moneycomms is of a different opinion – he told us: "I don't think they offer better accounts to richer customers – there is just more choice if you earn more.
"It's no different to buying a car, a holiday etc – the more you earn the more choice you get."
How to find the best bank account
It’s worth looking at a comparison service to see what’s on offer. With Go Compare, you can use the government-backed Midata tool to securely update past transactions for customised current account recommendations.
Think about how you usually use your account. If you use your overdraft a lot, you’ll want a bank with low fees. While if you tend to leave a lot of money sitting in your account, you’ll want a bank that pays interest on accounts in credit. It’s also worth checking if a new current account will give you access to a higher interest savings account.
Look at other features such as switching bonuses and incentives too. First Direct are offering new joiners either £150 in Expedia vouchers or gadgets such as Bose Headphones, while M&S are offering a £125 gift card, which increases by £5 a month if you pay £1000 into the account each month.
For all the latest switching deals, go to MoneySavingExpert.com
But even if find yourself excluded from the most attractive deals – there are still current accounts for all salary ranges.
In the table below, Which? has picked out the best current accounts depending on how much you earn, considering the minimum monthly deposit and required salary.
Some accounts offer cashback if you pay in the minimum amount – on the Halifax Reward account, for example, you’ll earn £2 a month regardless of whether you pay in £750 or £1500.
In these cases, you should think carefully about whether you’re benefiting from paying in more than the minimum, or whether you may be able to get a better return on the extra money in another account.
How to switch bank account
- Under the Current Account Switching Service, swapping banks should take seven working days. That includes all your payments, direct debits and standing orders being moved too. Just open your new account and then ask your new provider to close your old account using the switch service.
- Make sure you are eligible. Most accounts have certain requirements, such as paying in a minimum amount of cash each month.
- Watch your overdraft. Check your new bank will offer you the same limit — and does not have higher costs for using it.
In the beginning of this month, the best and worst banks were crowned – and the result might surprise you.
Earlier, we also revealed the banks that most people are switching to.
Meanwhile, Citizens Advice claims millions are overcharged by banks, insurers and broadband firms by nearly £1,000 a year due to loyalty.
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