Kroo Bank has increased its current account interest rate to 3% for new customers, making it a Moneyfactscompare.co.uk 'pick of the week'. The variable rate will be paid on balances of up to £500,000, with no minimum deposit and free transactions abroad.
Rate details and bonus period
The rate includes a fixed bonus of 2% AER for the first 12 months, so customers should be aware that their interest earnings will drop sharply after one year. Existing customers earn a tracker rate 1.1% below the Bank of England base rate.
Savings accounts tend to offer much higher returns, but Adam French, head of consumer finance at Moneyfactscompare.co.uk, said this account would suit spenders who hold cash in their current accounts.
Expert and CEO comments
"While many savings accounts offer more competitive returns, the app-based account from Kroo Bank may be ideal for those in the habit of holding larger sums in their current account," French said. "It pays 3% AER interest on balances of up to £500,000 – but only for new customers. Interest is paid monthly and it includes a 2% AER bonus which applies for the first 12 months, which should be taken into consideration by anyone planning to use the account over a longer term."
"The easy to open app-based account also offers fee-free transactions abroad, making it a tempting proposition for anyone who regularly spends or withdraws money overseas," he added.
Veronika Lovett, chief executive officer at Kroo Bank, said money left in current accounts paying zero interest are losing spending power over time. She said this enhanced current account offer would help "money to work harder and go further".
How other accounts compare
Nationwide Building Society is paying the highest interest at 5% on its FlexDirect - Funded account, but there are terms attached. The credit interest rate includes a 12-month bonus, and there is a minimum regular funding requirement of £1,500 per month.
The Santander Edge Up current account is paying 2.10% interest, and it also requires minimum funding of £1,500 per month, as well as at least two direct debit mandates every month. iFAST Global Bank is paying 2.65% AER on the Multi-Currency Current Account, and there is no fee.
