Lloyds TSB increases current account interest rate

Lloyds TSB, one of the UK's leading "big four" high street banks, has today announced plans to offer up to 3.2% annual interest on its current accounts from February 10.

The announcement follows similar moves from Abbey National, who last January raised the rate of interest on its current account to 3.04% AER for customers paying in ?1,000 a month, and Halifax, who followed suit, offering 3.04% interest on current accounts from December.

Under the terms of the offer, known as "Plus", Lloyds TSB current account holders paying over ?1,000 into their account every month can choose to upgrade online to receive credit interest on their account. If, as an account holder, you apply for an upgrade, you will receive 3.2% interest on your account if you pay in over ?2,000 a month, and 2.53% if you pay in between ?1,000 and ?2,000.

The offer also applies to new customers who can make payments of over ?1,000 a month into their current accounts.

However, in order to be eligible for the upgrade, customers must apply online. Present customers can log on to the Lloyds TSB website and opt for an upgrade (providing they can commit to the minimum monthly payments). New customers can apply to open an account with Lloyds TSB now, register for internet banking and then upgrade to Plus when it launches in February.

As a further incentive, Lloyds TSB has also announced that it intends to reduce its authorised overdraft rates to as low as 8.7%.

Eric Daniels, group executive director of UK retail banking at Lloyds TSB, said: "We believe this provides a compelling reason for customers to do business with us. This current account pays the best credit interest rate on the high street, combined with reduced overdraft rates and all the benefits of a major bank."