Savers' fury as TSB slash interest rate on current account by two percent

The change will see annual rate on the TSB Classic Plus Current Account tumble from five percent to three percent on balances up to £1,500 from July 2, 2019. TSB previously increased the rate to five percent in May 2018 after the bank suffered a huge IT meltdown last year which saw customers struggling to gain access to their accounts. The bank has begun writing to customers to notify them of the change but has yet to specify how many people will be affected. In an email sent by TSB, customers are advised to do nothing if they are happy with the change.

But for those who are unhappy, the bank says customers also have the option to close or switch account without charge at any time.

TSB said it constantly reviews its rates to make sure they are both sustainable for the bank and right for its customers.

Craig Bundell, TSB’s director of personal current accounts, said: “Our Classic Plus remains one of the UK’s best current account as we continue to offer our customers the best ongoing current account interest rate available in the marketplace.”

The three percent interest rate applies to customers who pay in at least £500 a month into their current account and have registered for internet banking as well as having chosen paperless statements and correspondence.

In some better news, the bank said TSB current account customers can earn up to £375 for recommending TSB’s Classic or Classic Plus Current Account to up to five friends if they all switch.

Friends who have been referred and switch their bank account to TSB will also receive £75 in the offer running until June 30.

Mr Bundell continued: “Giving something back to our customers has always been important to us and so I’m delighted that we’re today also launching our popular refer a friend offer.

“Existing TSB current account customers can refer up to five friends so they could earn up to £375 if all five friends switch their bank accounts to us.”

The news from TSB comes as rival NatWest announced it was unveiling the largest cash bonus currently offered by UK banks.

NatWest is currently offering new and existing customers £175 for switching their main account in an offer running until June 7.

The £175 will be split into two payments – £125 after the first few months and a further payment of £50 once the account has been open for a year.

Rachel Springall, a finance expert at Moneyfacts.co.uk, said: “It’s disappointing news that TSB will be dropping its lucrative credit interest rate by 2 percent in July.

“Thankfully, customers can still earn 5 percent elsewhere, such as with NationWide’s FlexDirect that pays 5 percent for the first 12 months on balances up to £2,500 and customers will just need to pay in £1,000 a month.”

She said TSB’s current account “is still a decent offer and it should be considered against the rest of the competition”.

Ms Springall continued: “Customers who have a little extra time on their hands over the Easter break may well be looking for a brand new current account, and thankfully there are some great switching incentives out there.

“One of the most generous was launched today by NatWest offering £175 when customers switch to them.”