From 1st October, Starling Bank current account holders can benefit from an increased interest rate on their current account balance. At present, Starling Bank only pays 0.05% AER interest on current account balances, but this is set to increase to 3.25% AER (variable) from 1st October 2023. The increase in interest on current account balances is in addition to the existing 5.53% AER interest that customers can earn on balances over £2,000 with a Starling 1-year Fixed Saver.
John Mountain, interim CEO of Starling Bank said: "Most banks with competitive interest rates require customers to move money into a separate account or pay a subscription fee. This friction means that many people won’t get around to taking action and so miss out on the interest on their main balance. We wanted to change this and ensure that everybody benefits by paying interest on the first £5,000 in their current account. This is something that all big banks should consider doing."
In this article, we look at who is eligible to receive the increased interest rate and how it compares to other accounts on the market. For more information on Starling Bank and its features, read our 'Starling Bank review'.
Who can get 3.25% interest with Starling Bank?
New and existing customers who hold a Personal, Joint or Kite account with Starling Bank are eligible for 3.25% AER variable interest on their current account balance. The money does not have to be moved to another Space within the account and the interest rate is applied automatically.
Interest can be earned on balances up to £5,000 and includes any money held in Spaces or in a child's Starling Kite account. If you are both a personal and joint current account holder with Starling you can benefit from interest on both your current and joint account balance up to £5,000 each.
The interest will only be paid on positive account balances and is paid on the first day of the following month. If you do not want to receive interest on your current account balance, it is possible to opt-out by contacting customer services via the app.
How does Starling Bank compare to other accounts?
In the following table, we compare Starling Bank* to other bank accounts that offer interest on current account balances. For additional ways to maximise the interest earned on your money, read our article, 'Best savings accounts in the UK' or visit our Savings Best Buy tables.
Interest paying current accounts - a comparison
|Nationwide Building Society||Kroo||Santander||Starling Bank*||Virgin Money|
|Account name||FlexDirect Account||Kroo Current Account||Santander Edge Up||Personal/Joint account||M Plus Account|
|Minimum opening balance||£0||£1||£1||£0||£0|
|Monthly account fee||£0||£0||£5||£0||£0|
|Summary||Interest rate is fixed for 12 months and is payable on balances up to £1,500. Rate drops to 1.00% after 12 months and you must pay in £1,000 a month to qualify for the rate.||Interest is payable on current account balances up to £85,000. Interest is paid monthly.||Monthly interest of 3.50% on balances up to £25,000. Must pay at least £1,500 into your account each month and have 2 active direct debits.||Interest rate is payable on positive current account balances up to £5,000. Interest is paid monthly.||Interest is payable on current account balances up to £1,000. Interest is paid on the last working day of the month.|
^rate payable from 1st October 2023.
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