Starling Bank Plans to Eliminate 3.25% Interest Rate from Well-Received Current Account in the Near Future
Refreshed Perspective:
Starling Bank is axing the 3.25% interest rate on its current account, effective from 10th February. While Starling Bank isn't renowned for top-tier savings, it's popular for its digital-friendly current account offerings.
Before this change, Starling's current account boasted the fourth-best interest rate on the market, applicable to balances up to £5,000, often lauded as one of the finest current accounts for online banking by the Competition and Markets Authority.
With this change, you'll no longer earn any interest on your current account deposits.
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Confusion surrounding Starling Bank arose recently, as they introduced a 4% easy-access savings account in November, only to see many customers face rejections for this deal - the bank reluctant to provide explanations.
Check out our article exploring the flak Starling Bank's received for snubbing savings account applicants, all while scrapping the interest on its current account.
Several disgruntled customers have reached out, mulling over the possibility of escalating their complaints to the ombudsman.
A our website poll of 750 respondents revealed that a staggering 57% of applicants were rejected, while a mere 41% found success.
In a statement shared earlier with our website, Starling Bank revealed it had greenlit tens of thousands of Easy Saver applications since its soft launch in November, but a considerable number have also been turned down, citing certain eligibility criteria without further explanation.
In a separate statement regarding the bank's current account alterations, a Starling spokesperson said: "We constantly evaluate our products to be the best bank possible and help our customers achieve their financial goals. While we've nixed the interest on current accounts - a move notified to customers in November 2024 - customers can still revel in the other award-winning current account features, complemented by 24/7 UK-based customer service and industry-leading app security."
With no interest offered on the current account and a possible hurdle to obtaining their 4% savings deal, are you ready to reassess where you bank?
Starling Current Account: To Switch or Not?
Though the interest rate is being phased out, Starling's current account remains appealing with perks such as zero fees for foreign spending and a range of budgeting tools at your disposal.
If you favor digital banking and the convenience it offers, you're likely to appreciate the user-friendly experience provided by Starling. The app provides spending insights to help you trace your expenses over the previous month, categorizing them across more than 50 areas, from groceries and bills to vacations.
Naturally, some customers may feel frustrated by the challenges experienced in opening a savings account. Nevertheless, if you're generally content with your current account experience, the disappearance of the 3.25% interest rate might not be enough to prompt a switch on its own.
If you opt to stick with Starling's current account and don't have a separate savings account, make sure to open one. You are free to establish a savings account with a different provider, considering the difficulties at Starling currently.
"Individuals pursuing a higher interest rate would be wise to assess the latest easy-access accounts on the market and bear in mind that rates are liable to drop in the near future due to the base rate cut," advises Rachel Springall, finance expert at comparison site Moneyfacts.
She adds: "Coventry Building Society offers an attractive 4.85% on its 4 Access Saver, but price reductions are imminent for the market-leading deal from Chase, currently paying 5% AER (4.89% gross)."
In light of Starling Bank's decision to axe the interest rate on its current account and the challenges faced by some customers in obtaining their 4% savings deal, it may be necessary for individuals to reconsider their personal-finance strategy and exploring alternative banking options that offer better savings rates. For instance, Coventry Building Society offers an attractive 4.85% on its 4 Access Saver, providing an alternative for those seeking higher savings returns.
