Glossary · UK
What is High-Interest Current Account?
A high-interest current account pays a competitive rate of credit interest on your everyday balance, usually up to a capped amount and subject to conditions.
Full Definition
A high-interest current account is an everyday bank account that pays credit interest on money held in it, often at a rate higher than many easy-access savings accounts, but typically only on balances up to a set cap and only if you meet monthly conditions. Common requirements include paying in a minimum amount each month, setting up direct debits, or staying logged into mobile or online banking. Above the capped balance, no interest is usually paid, so these accounts suit people keeping a modest sum for day-to-day spending rather than large savings. Interest earned counts towards your Personal Savings Allowance: basic-rate taxpayers can receive GBP 1,000 of savings interest tax-free, higher-rate taxpayers GBP 500, and additional-rate taxpayers nil; interest above that is taxed at your marginal Income Tax rate. Compare the headline rate against the cap, the conditions and any fees, and consider an ISA for tax-free saving on larger amounts.