Chase Bank swaps 1% current account interest for a 1% easy-access savings boost – here’s why

Chase Bank has announced it is dropping its 1 per cent current account interest feature and swapping it for a 1 per cent easy-access interest boost.

From today, JPMorgan-backed Chase is adding a 1 per cent bonus rate to its 4.1 per cent easy-access account, bringing it to a best buy 5.1 per cent.

But at the same time, it announced it will stop paying all customers 1 per cent interest on the balance of their current account as of 5 August.

Chase said this was so it could ‘continue offering customers products and features best suited to their needs’.

The new easy-access rate is available to new Chase customers who joined after 2 May 2024 and some eligible existing customers

Existing customers who did not have a saver account open as of 2 May or who had a balance of less than £50,000 across savings accounts at of 2 May 2024 will be able to open the easy-access account.

The 1 per cent bonus will hike customers’ easy-access rate to 5.1 per cent and the bonus will run until 16 January 2025.

This propels it to the top spot for an easy-access deal as the next best deal on This is Money’s best buy tables pays 5.02 per cent.

Chase’s underlying rate of 4.1 per cent is variable and could change before 16 January 2025. But the 1 per cent boost is fixed, so even if Chase’s rate changes prior to 16 January 2025, customers will continue to earn 1 per cent on top of whatever the new rate is if it changes.

Savers can deposit up to £1million in the easy-access account, though only £85,000 is protected by the Financial Services Compensation Scheme (FSCS).

Savers can access their savings as often as they like without facing withdrawal penalties on interest or fees.

Chase is entirely app-based, so all documentation when opening an account is verified via the app. The US giant launched in Britain in 2021.

What’s behind the move?  

Chase now has millions of customers and and this is a clear move to attract bigger savings balances.

James Blower, founder of website Savings Guru said: ‘Overall, this looks a move designed to improve Chase’s returns.

‘The 1 per cent bonus on savings is both time limited and on top of a base rate linked underlying savings rate. 

‘This means that it is a cheap way to potentially attract extra savings balances now but pay them a lower rate when the bonus expires, knowing that, with the base rate linked underlying rate there’s no risk of Chase sitting with lots of balances that it is paying more in interest on than it can earn from them.’

While Andrew Hagger of MoneyComms said the decision to swap out in-credit interest for a savings rate boost could be because paying 1 per cent interest on all customers’ current accounts is proving too expensive. 

He said: ‘It could be that paying the 1 per cent on total current account credit balances has now become too much of an overhead for Chase, hence the change of direction.’

‘Unfortunately it takes away the shine of a disruptive ‘challenger’ and makes them much the same as the big high street banks who also pay zero interest on current account balances.’

James Blower added: ‘Chase could be re-positioning itself for the expected base rate cuts which are forecast. 

‘Paying in-credit interest on current accounts will get less profitable for them in a falling interest rate environment so doing away with this looks a sensible move for them, but is not so good for customers.’

Shaun Port, managing director of savings at Chase UK, said: ‘We want to help customers make their money work harder while providing a simple and straightforward way to save.

‘By introducing a bonus offer on our easy access saver, new and existing customers can now earn an extra 1 per cent on their savings with Chase until 16 January 2025, further supporting them in reaching their savings goals.’

How does it compare to other easy-access deals

If you joined Chase before 2 May 2024 or have a balance of more than £50,000 across savings accounts as of 2 May 2024, there are several other good easy-access deals you can get.

The next best deal is Oxbury Bank’s easy-access account paying 5.02 per cent.

Savers need to deposit a minimum of £20,000 in Oxbury’s account to open the account.

This is a limited time deal and so could be removed from the market at any time. To open the account, savers must download Oxbury Bank’s app. 

Meanwhile Monument Bank is offering 5.01 per cent on its easy-access deal. Savers need to deposit at least £25,000 to open this account. 

This account can only be opened by downloading Monument Bank’s app. 

Chase said that a saver puting £5,000 in its easy-access account today would earn £125.91 in interest over six months, albeit if all things stay the same and the interest rate does not change.

James Blower said: ‘While getting rid of the in-credit interest makes the account less attractive for savers, with the 1 per cent cashback and 5 per cent on round ups, it is still a decent account if used fully.’