Starling Bank scraps 3.25% present account curiosity from February price as much as £162.50 yearly – here is why
- Starling pays 3.25% on balances up to £5k – this will stop from 10 February 2025
Starling Bank is scrapping its popular current account interest feature, This is Money can reveal.
The digital bank will stop paying all customers 3.25 per cent interest on their current account balances from 10 February 2025 – and is removing the perk entirely.
Currently, Starling current account customers receive the bumper interest on their current account balances up to £5,000.
Starling boosted its current account interest rate a little over a year ago, before that it paid 0.05 per cent since 2017.
If a balance of £5,000 was maintained in the current account and the interest rate remained at 3.25 per cent, customers could earn £162.50 in a year.
Scrapped: Starling will stop paying current account customers 3.25% interest on current account balances from February 2025
A Starling Bank spokesman, said: ‘We continually keep our products under review and have taken the decision to remove current account interest from 10 February 2021.
‘Over the last couple of weeks we have notified all customers of the new current account terms and conditions in the Starling.
‘Customers will still benefit from fee free spending abroad and 24/7 customer service.’
New and existing sole or joint current account customers will carry on earning interest on balances up to £5,000 until 10 February 2025.
It comes as This is Money revealed Starling will launch a 4 per cent easy-access account, linked to its current account from the end of this month.
This is Money understands that the first customers have been able to open the easy saver account this week and it will be rolled out to more customers throughout the week.
The easy-access account will only be available to Starling’s sole current account customers when it launches, not joint account holders.
Over the summer, digital rival Chase scrapped its 1 per cent current account interest and swapped it for a temporary 1 per cent boost on its easy-access account.
At the time, James Blower director of Savings Guru said: ‘Paying in-credit interest on current accounts will get less profitable for Chase in a falling interest rate environment.
‘This is a cheap way to potentially attract extra savings balances now but pay a lower rate when the bonus expires.’
Most banks pay no interest on current account balances, so removing this attractive feature takes away some of the shine of Starling as a disruptive digital challenger.
Where else can you get interest on current account balances?
Starling has the most attractive rate on the market on larger current account balances.
Nationwide’s FlexDirect account pays 5 per cent interest on current account balances fixed for the first 12 months opening the account, but only up to £1,500.
Customers maintaining that balance in their account the whole time could earn up to £75 over the year.
The rate falls to 1 per cent when the 12-month introductory period is up.
Customers must deposit at least £1,000 a month into the FlexDirect account to receive the 5 per cent in-credit interest rate and, later, the 1 per cent rate.
Digital Bank Kroo also offers interest on balances held in its current account.
Kroo pays 3.65 per cent on current account balances. This rate tracks at 1.1 per cent below the Bank of England base rate, which currently stands at 4.75 per cent.
If the base rate were to be cut to 4.5 per cent, for example, Kroo’s in-credit interest rate would fall to 3.4 per cent.
Kroo can also widen the margin it tracks below the base rate at any time.
There is no minimum monthly deposit required to receive current account interest.
Santander’s Edge Up current account comes with 3 per cent interest on current account balances up to £25,000.
But some of the interest will be eaten up by the £5 monthly fee the account carries.
The Edge Up account also comes with 1 per cent cashback on essential spending such as shopping and travel (capped at £15 a month) and 1 per cent cashback on household bills paid by direct debit.
Santander is currently paying a £150 switching bonus to customers who move their current account to its Edge Up current account.
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