Lloyds Bank and Halifax to make major change to current account affecting thousands of customers
THOUSANDS of Lloyds Bank and Halifax customers are set to miss out on extra cash as a major change to current accounts takes effect next month.
The high street banks will no longer pay interest on money held in their student bank accounts from June 2.
Currently, Lloyds student current account holders earn 2% interest on balances between £1 and £5,000.
For example, keeping £1,000 in the account for a year would earn you £20 in free cash.
Meanwhile, Halifax student bank account holders earn 0.5% interest on all balances above 1p.
For instance, keeping £1,000 in the account for a year would generate £5 in free cash.
Read more in money
However, from June 2, customers of both accounts will stop earning any interest on their current account balance.
Following this change, TSB will remain the only student bank account provider offering interest on funds held within the account.
TSB offers 5% interest on balances up to £500.
For example, if you keep £500 in your account for a year, you'll earn £25 in interest.
Most read in Money
A Lloyds Banking Group spokesperson said: "Our student account comes with benefits such as a fee free overdraft as well as Everyday Offers, providing cashback when shopping at select retailers.
"We're also making changes, including some exciting new benefits, when we launch our 2025 Student Account in the coming months."
If earning interest on your account balance isn’t important to you, other student bank accounts offer great perks like interest-free overdrafts, cashback, and more.
However, if you have savings and want to make the most of them, it’s better to put them in a dedicated savings account.
These accounts usually offer higher interest rates, and there are plenty of options to choose from.
What do banks offer students?
Santander Edge Student Account
- Guaranteed 0% overdraft: £1,500 in years 1 to 3, £1,800 in year 4 and £2,000 in year 5
- Free four-year 16-25 Railcard (worth £100), offering a third off rail travel (not valid in Northern Ireland).
NatWest and RBS Student Accounts
- 0% overdraft: £500 in the first term, up to £2,000 from the second term of year 1 until the end of year 2 and up to £3,250 in years 3+
- Free four-year tastecard (worth £55/year) with discounts at restaurants, cinemas, and days out.
HSBC
- 0% overdraft: £1,000 in year 1, up to £2,000 in year 2 and up to £3,000 in year 3+
- Access to a linked 5% regular savings account
Nationwide
- 0% overdraft: £1,000 in year 1, up to £2,000 in year 2 and up to £3,000 in year 3+
Co-op
- 0% overdraft: £1,400 in year 1, up to £1,700 in year 2 and up to £2,000 thereafter
Perks: None
Lloyds Bank
- 0% overdraft: £500 for the first 6 months, up to £1,000 for months 7-9, up to £1,500 until year 3 and up to £2,000 from year 4
- Cashback at certain retailers
Bank of Scotland
- 0% overdraft: £500 for the first 6 months, up to £1,000 for months 7-9, up to £1,500 until year 3 and up to £2,000 from year 4
- Cashback at certain retailers
Halifax
- 0% overdraft: Up to £1,500
- Cashback at certain retailers
Barclays
- 0% overdraft: £500 in term 1, up to £1,000 for the rest of year 1 and up to £1,500 thereafter
TSB
- 0% overdraft: £500 for the first 6 months, up to £1,000 for months 7-9 and up to £1,500 until year 3
- 5% interest on balances up to £500
How can I make my savings go further?
Over a quarter of adults (28%) keep their earnings in current accounts that pay no interest, according to the Building Societies Association (BSA).
Most major high street banks do not offer any interest on current account deposits.
This means millions of Brits are missing out on free cash because they keep their savings in the wrong account.
There are 24 that do pay interest but they still pay lower rates than easy access savings accounts, according to Moneyfactscompare.co.uk,
For example, Kroo, an online-only challenger bank, offers a 3.65% interest rate on current account deposits up to £500,000.
Starling Bank used to pay interest on current account balances, until the perk was axed back in February.
However, savers could earn more by moving their money to Atom Bank's easy access savings account, which pays 4.75% interest with a minimum deposit of just £1.
If you keep your cash in non-interest current accounts, you'll miss out on hundreds of pounds in interest.
What are the best savings rates?
There are four types of savings accounts fixed, notice, easy access, and regular savers.
The rates offered on each of these accounts vary, but we've rounded up the best available right now.
If you're looking for a savings account without withdrawal limitations, then you'll want to opt for an easy-access saver.
These do what they say on the tin and usually allow for unlimited cash withdrawals.
The best easy-access savings account available is from Cahoot, which pays 5% - and you only need to pay a minimum of £1 to set it up.
This means that if you were to save £1,000 in this account, you would earn £50 a year in interest.
If you're looking to grow your savings and don't need regular access to your funds, a fixed-term bond or notice account could be a better option.
The best notice accounts offer slightly higher rates than the best fixed-term bonds.
These also come with more flexibility when accessing your cash.
For instance, Monument Bank's 40 day notice account offers savers 4.65% back with a minimum £1,000 deposit.
The best fixed rate currently offered is FirstSave's one-year fixed bond, which pays 4.5%, requiring a minimum investment of £1,000.
If you want to build a habit of saving a set amount of money each month, a regular savings account could pay you dividends.
Principality Building Society's Six Month Regular Saver offers 7.5% interest on savings.
It allows customers to save between £1 and £200 a month.
Save in the maximum, and you'll earn £25.81 in interest.
While regular savings accounts look attractive due to the high interest rates on offer, they are not right for all savers.
You can't use a regular savings account to earn interest on a lump sum.
Read More on The Sun
The amount you can save into the account each month will be limited, typically to somewhere between £200 and £500.
Therefore, if you have more to save, it would be wise to consider one of the other accounts mentioned above.
How can I find the best saving rates?
WITH your current savings rates in mind, don't waste time looking at individual banking sites to compare rates - it'll take you an eternity.
Research price comparison websites such as MoneyFactsCompare.co.uk and MoneySupermarket.
These will help you save you time and show you the best rates available.
They also let you tailor your searches to an account type that suits you.
As a benchmark, you'll want to consider any account that currently pays more interest than the current level of inflation - 2%.
It's always wise to have some money stashed inside an easy-access savings account to ensure you have quick access to cash to deal with any emergencies like a boiler repair, for example.
If you're saving for a long-term goal, then consider locking some of your savings inside a fixed bond, as these usually come with the highest savings rates.