Starling Bank is to scrap the 3.25% interest rate on its current account on Monday, 10 February. While the bank is not necessarily known for having the best savings, it is popular for its current account offering and digital capabilities.
Before this change, Starling’s current account offered the fourth-best rate on the market, payable on balances up to £5,000, and has been listed as one the the best current accounts for online banking by the Competition and Markets Authority.
The change means you will now earn no interest at all for any cash you have in your current account.
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Instead, Starling Bank launched a 4% easy-access savings account in November – but a recent MoneyWeek investigation found that a large number of customers were being rejected for the savings deal, with no explanation from Starling.
See our article looking at how Starling has come under fire for rejecting customers for its savings deal, while also removing the interest on its current account.
A number of customers have written in to MoneyWeek and have indicated they are considering taking their complaint to the ombudsman.
A MoneyWeek poll of 750 respondents revealed that 57% were rejected when they applied for the Starling easy-access savings account. Less than half of respondents (41%) reported success when trying to open an account.
In a statement previously shared with MoneyWeek, Starling said it had “approved tens of thousands of Easy Saver applications since soft launching in November”, but that it had also declined some “in line with certain eligibility criteria”. The bank said it could not share further details on what those eligibility criteria were.
In a separate statement on the bank’s current account changes, a Starling spokesperson told MoneyWeek: “We regularly review our products so we can be the best bank we can be and help our customers achieve their financial goals.
“Whilst we’re removing the interest on current accounts – which was notified to customers in November 2024 – customers can still benefit from the other award-winning current account features, alongside 24/7 UK-based customer service, and industry-leading app security.”
With no interest rate paid on the current account and the possibility of being denied the easy-access savings deal of 4%, is it time to review where you bank?
Starling current account: should you switch?
Despite the interest rate being scrapped, Starling’s current account still offers some attractive features, including no fees when you spend abroad and a range of budgeting tools.
If you like digital features and the convenience of online banking, you will probably be a fan of the user experience with Starling. The app gives you spending insights so you can see where your money has gone over the past month. This includes more than 50 categories, from groceries and bills to holidays.
Naturally, some customers will be frustrated by the challenges they have run into when trying to open a new savings account. However, if you are broadly happy with your current account experience, the disappearance of the 3.25% interest rate might not be enough of a reason to switch in its own right.
If you decide to stick with Starling’s current account but don’t have a separate savings account already, make sure to open one. There is nothing stopping you from doing this with a separate provider, particularly given the reported challenges at Starling at the moment.
“Those who are looking for a higher rate of interest would be wise to compare the latest easy-access accounts on the market and be conscious of rates coming down in the weeks ahead because of the base rate cut,” says Rachel Springall, finance expert at comparison site Moneyfacts.
She adds: “Coventry Building Society pays an attractive 4.85% on its new 4 Access Saver, but cuts are coming to the market-leading deal from Chase next week, which currently pays 5% AER (4.89% gross).”
