First Direct scraps credit interest

Samantha Owens, Head of Personal Finance at Moneyfacts.co.uk, comments: “First Direct has become the first current account provider to scrap credit interest on its current accounts, promising to invest this money in enhanced features and savings rates.

“While First Direct is in the minority in not paying credit interest on current accounts, it is not alone, and many others pay a measly 0.10%. With the rates on its existing accounts ranging between 0.1% and 2%, many account holders will not face significant losses.

“With a core of providers offering credit interest on current accounts to beat those found in the savings market, its unlikely that in the short term that we will see the demise of credit interest on current accounts.”