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Current Accounts Now Offer Over 5% Interest

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  Published in Business and Finance on Tuesday, February 17th 2026 at 18:27 GMT by This is Money
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Published: February 17th, 2026

For years, current accounts were financial black holes, offering little to no return on deposited funds. But the landscape has dramatically shifted. Driven by a sustained period of rising interest rates, banks are now engaged in a fierce competition to attract savers, resulting in current account interest rates exceeding 5% - a level previously unheard of for everyday banking. However, navigating this new terrain requires careful attention to detail, as these lucrative rates often come with caveats and limitations.

The Rise of Competitive Current Accounts

The current environment is a direct response to the Bank of England's monetary policy. With the base rate currently at 5.25%, banks are incentivized to offer competitive rates to attract deposits. This has led to a surge in attractive current account offerings. While the pace of increases is predicted to slow, the possibility of further base rate hikes remains, potentially pushing current account rates even higher. Conversely, a potential fall in the base rate would likely trigger a corresponding decrease in these attractive offers.

Top Current Account Rates - February 2026

As of today, several institutions are leading the charge in offering high-interest current accounts. Here's a snapshot of some of the top contenders:

• Chase: Currently offering 5.1% AER (Annual Equivalent Rate) on balances up to GBP250,000. The account boasts a streamlined online setup and instant payment processing, making it a convenient choice for those looking to maximize returns on larger savings.
• Virgin Money: Providing a competitive 5.13% AER, but with a more limited scope - applicable only to balances up to GBP1,000. This makes it a suitable option for individuals with smaller savings pots aiming for a high percentage return.
• NatWest: Offering 5.1% AER on balances up to GBP1,250, but with a crucial condition: the account holder must establish and maintain at least two active direct debits to qualify for the enhanced rate.

Important Considerations: Beyond the Headline Rate

The allure of a 5% AER is strong, but it's crucial to move beyond the headline figure and scrutinize the details. These high rates are rarely universal and often come with significant restrictions. Common limitations include:

• Balance Caps: Many accounts restrict the high interest rate to a specific balance threshold. Any funds exceeding this limit will likely earn a considerably lower rate, diminishing the overall return. This is clearly demonstrated by Virgin Money's GBP1,000 limit.
• Promotional Periods: Some accounts feature introductory rates that are only valid for a limited time. After the promotional period expires, the rate may revert to a much lower standard rate.
• Conditional Requirements: As seen with NatWest, certain conditions - such as setting up direct debits - may be necessary to qualify for the advertised rate. Failing to meet these conditions will result in a lower interest rate.

Maximizing Your Savings Potential

To effectively leverage these competitive current account rates, consider the following:

1. Comparative Analysis: Don't settle for the first attractive offer you encounter. Thoroughly compare rates across multiple banks and building societies. Utilize comparison websites and bank's own rate finders to gain a comprehensive overview.
2. Terms & Conditions Scrutiny: Devote time to carefully reading the fine print. Understand the limitations, conditions, and potential fees associated with each account.
3. Balance Optimization: Strategically allocate your funds to maximize returns. Consider distributing your savings across multiple accounts to take advantage of different balance tiers and rates.
4. Long-Term Perspective: While current rates are appealing, remember that they are subject to change. Factor in the potential for future rate fluctuations when making your decision.
5. Beyond Interest: Think about other account features. Are rewards, cashback programs or convenient mobile banking tools important to you? Choose an account that aligns with your broader financial needs.

The Future of Current Account Rates The prevailing economic climate continues to play a key role in determining current account interest rates. While predictions suggest a slowing rate of increase, unforeseen economic events could swiftly alter the trajectory. Savers should remain vigilant, regularly review their account options, and adapt their strategies to capitalize on the most favorable opportunities. The era of negligible current account interest is over - but informed decision-making is now more crucial than ever.