Review of TSB Classic Plus Current Account

Written by Karen Bryan

tsbThe TSB Classic Plus Account pays a very appealing 5% (variable) rate of interest. This rate made me prick up my ears in the context of a top interest rate of around 1.4% on open-to-all instant access savings accounts. Unfortunately, the 5% interest is only paid on balances up to £2,000. You earn no interest if your balance is over £2,000.

TSB say that this isn’t a teaser rate. Several other high interest current accounts e.g. the Nationwide Flex Direct, only pay a high rate of interest for the first 12 months. However, with a variable rate of interest you never know. You need to be ready to close the account if the rate becomes uncompetitive.

The TSB Classic Plus Account is more straightforward than most other high interest current accounts. You need to pay in a minimum of £500 a month. There is no monthly charge. Rivals such as the Club Lloyds Current Account require that you pay in a minimum of £1,500 per month and pay out at least two direct debits per month to avoid the £5 montly fee and to earn the advertised 4% (variable) rate of interest on balances between £4,000 – £5,000.

You also need to sign up to receive paperless statements and correspondence for the TSB Classic Current Account. I assumed that would be the default on the account, but it wasn’t. So make sure you check this, or you may not receive interest on your balance.

To earn the maximum interest from the TSB Classic Plus Account the best strategy is probably to make an initial deposit of the full £2,000, then set up a standing order from another account to pay in £500 on the same date the following month and set up a standing order from the TSB account to transfer that £500 out the next day, so that the balance is only over £2,000 for one day.

Rates of interest correct on 11 august 2014.