Starling Bank will no longer pay interest on current accounts from today in a major blow for customers.
The digital bank used to pay 3.25% interest on current account balances up to £5,000, which gives customers £162.50 a year. However, this perk was removed for good from February 10. Starling started contacting all current account holders back in November about the change.
The bank has instead introduced a new 4% easy-access savings account, which would pay out £204 in interest over a year if you had £5,000 saved. The new savings account is linked to the standard Starling current account. This rate is variable, so it can go up or down – and there are better rates available elsewhere currently.
Right now, cash ISAs pay more than easy-access accounts. The best cash ISA rate right now is 5.03% from Trading 212, while the best rate for normal easy-access accounts is 4.85% from Coventry Building Society and Atom Bank. Regular saving accounts pay even more than this – but you’re normally limited to how much money you can save each month. For example, Principality Building Society pays 8% fixed for six months on up to £200 a month.
A spokesperson for Starling Bank said: “We continually keep our products under review and have taken the decision to remove current account interest from February 10, 2025 Over the last couple of weeks we have notified all customers of the new current account terms and conditions in the Starling app. Customers will still benefit from fee free spending abroad and 24/7 customer service.”
It comes after the Bank of England announce it is cutting its base rate from 4.75% to 4.5%. The base rate influences the return you get on your savings, and as the top rates still pay more than inflation – which is currently at 2.5% – savers are advised to act fast before they fall further.
Laura Suter, director of personal finance at AJ Bell, said: “Average rates have fallen in the past year and lots of people will be earning piddly amounts on their savings. Even if you took action to switch accounts during the period of high savings rates, if it’s been more than a year since you moved accounts you might find the rate you’re getting has plummeted and you need to ditch and switch again.”
Sarah Coles, head of personal finance, Hargreaves Lansdown, added: “More falls for fixed rates will come, once the market is convinced that more cuts are on the way. At the moment, it looks like this is some way off, especially with tariff dramas fuelling unease over inflation.
“At times like this, it’s easy to be bamboozled to a full stop, unsure as to whether rates will rise again before they fall. However, it if you hang on, in the interim you could be missing out on some rewarding deals – especially over slightly longer periods. Rather than waiting for the best possible moment to fix, it makes sense to take advantage of the best deals while they last”
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