Starling Bank has announced the interest rate on its current accounts will increase to 3.25% from 1 October.
Increasing from 0.05%, the move means Starling account holders will not need to transfer money between various accounts held with the bank to access better rates.
Generally, lenders offer better interest rates on savings rather than current accounts, which means customers often have to move funds around to gain higher interest, Starling interim boss John Mountain said.
“This friction means that many people won’t get around to taking action and so miss out on the interest on their main balance,” he continued.
“We wanted to change this and ensure that everybody benefits [...] this is something that all big banks should consider doing.”
Balances of up to £5,000 will be granted the full 3.25%, according to Starling, with a better rate of 5.53% still offered in the digital bank’s one-year fixed savings account.