Current account holders could unknowingly have accounts that pay no interest at all on their money, Moneyfacts.co.uk has revealed.

Their latest figures shows that nearly 50 per cent of all current accounts pay no interest to customers, compared to 12 months ago when this figure was 19 per cent.

According to the independent financial information provider, 83 per cent of current accounts pay around 0.10 per cent interest or less, while the average overdraft rate now stands at just over 13 per cent.  

Since August 2008, the average credit interest rate has fallen by more than 50 per cent to 0.71 per cent, however, Moneyfacts.co.uk believes this figure would have been lower if Abbey and Alliance and Leicester were not paying six per cent AER on their accounts, which is almost double what some of their rivals are offering.

Reacting to these findings, Michelle Slade, spokesperson at Moneyfacts.co.uk, is surprised fewer people have taken the opportunity to switch accounts to get higher interest rates, she said:

“A current account is many people’s most widely used product, yet so few will switch to get a better deal.

“Most people have their current account with one of the big five banks, but neither Barclays Bank or HSBC pay any credit interest at all.

“In the current economic climate, every penny counts and many customers are losing out on valuable interest.”

Ms Slade urged people they should not be afraid to switch their account, she added: “People assume that it will take too much time and efforts to switch all their regular payments, but this isn’t the case as the bank will do it all for you.”

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