Kroo Bank has urged Brits to ensure they are getting a decent return on their current account balances, after increasing its interest rate to a competitive 3% AER for new customers.
The digital bank will now pay 3.00% AER / 2.96% gross (variable) - which includes a fixed bonus of 2% AER for the first 12 months - on balances of up to £500,000, with no monthly fees and no minimum deposit. The new rate is the next step in Kroo Bank’s mission to deliver simple banking, designed to help customers’ money go further. As the bank is covered by the Financial Services Compensation Scheme, deposits of up to £120,000 per person are protected.
The interest rate increase positions Kroo among the top-paying current account providers in the country, yet analysis shows significant numbers of Brits are missing out on returns by leaving their money languishing in current accounts offering no return.
According to the latest data from the Bank of England, there is currently almost £306 billion held in non-interest bearing accounts. If that money was held instead in accounts paying 3%, the account-holders could benefit from a cumulative £9.18 billion a year in interest.
The need to ensure every penny is working as hard as possible has been emphasised by the recent rise in inflation, with the Bank of England forecasting further increases over the rest of the year. Money left in current accounts paying nothing are not just missing out on accruing interest, but actively losing spending power over time.
Veronika Lovett, Chief Executive Officer at Kroo Bank, said:
“Huge amounts of money is gathering dust, and not much else, in current accounts paying no interest according to Bank of England data. If your money is in one of the many non-interest paying current accounts, then it isn’t working for you, and with inflation likely to grow further that simply isn’t an option.
“Kroo Bank is determined to do things differently from the banks who take their customers for granted by offering no return, and by enhancing our current account interest rate for new customers, we are helping their money to work harder and go further.”
