Best and worst: Pounds 1000 in a current account

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AFTER the latest round of interest rate cuts, returns are shrinking on interest-paying current accounts. Even customers with substantial deposits may be measuring their interest payments in pence, not pounds.

Abbey National pays one rate of interest, regardless of the amount in the account. In common with its competitors, it argues customers would do better keeping large deposits in savings accounts.

Yorkshire Bank justifies its low rate on pounds 1,000 balances in its Paymaster Plus account with the argument that the tiered account offers better rates on larger amounts. Paymaster pays 2 per cent gross (1.5 net) on pounds 2,500-plus.

As the table shows, some accounts are paying substantially more on just pounds 1,000.

Those offering the highest rates on current accounts tend not to have many branches in the high street. Customers of Britannia's React 365 account, however, have access to 7,000 cash machines operated by other banks and societies.

The Co-op's Pathfinder pays well by saving paperwork. It offers a debit card instead of a chequebook.

----------------------------------------------------------------- Best and worst ----------------------------------------------------------------- 1,000 pounds in a current account The best % 1 Co-op Pathfinder 5.23 2 Beneficial Bank VISA 3.04 3 Save & Prosper/Robert Fleming Classic 2.66 4 Save & Prosper/Robert Fleming Premier 2.66 4 Britannia Reach 365 2.63 The worst 21 Royal Bank of Scotland Int'st Paying Acct 0.56 22 Abbey National Current Account 0.38 23 Co-op Ultra 0.38 24 Lloyds Bank Classic 0.38 25 Yorkshire Bank Paymaster Plus 0.38 Net compound annual rate paid on pounds 1,000, 19 January 1993 ----------------------------------------------------------------- Source: Robert Fleming/Save & Prosper -----------------------------------------------------------------