Do checking accounts earn interest?
Yes, many UK checking accounts (called current accounts) do earn interest in 2026, with top rates up to 5% AER on balances up to £1,500. Far better than traditional zero-interest accounts.
Are you tired of earning next to nothing on the money sitting in your checking account? Well, the landscape has dramatically changed. A new wave of high-interest current accounts has arrived in the UK, offering yields that put standard savings accounts to shame.
In this guide, we’ll reveal the top checking account interest rates for 2026, explain how the mechanics work, and show you how to switch banks to start maximizing your returns. No more neglecting that everyday banking balance!
Top Interest-Paying Accounts 2026
Here are the highest-earning current accounts you can open in the UK right now:
Do Checking Accounts Earn Interest in 2026?
Top UK High-Interest Current Accounts Comparison
| Account Name | AER Rate | Balance Limit | Interest Payment | Min. Deposit | Monthly Fee | Best For |
|---|---|---|---|---|---|---|
| Nationwide FlexDirect BEST RATE | 5% (12mo) → 1% | £1,500 | Monthly | £1,000/month | None | New customers, small balances |
| Kroo Bank LARGEST LIMIT | 2.65% | £500,000 | Monthly | None | None | Larger balances, long-term |
| Santander Edge Up | 2.50% | £25,000 | Monthly | N/A | £5/month | Mid-sized balances |
| Virgin Money M Plus | 1% | £1,000 | Monthly | N/A | None | Low balance accounts |
As you can see, the top rates dwarf the 0-1% interest you’ll find at most traditional high street banks. And with flexible balance limits, monthly payouts, and no monthly fees, these accounts make it easy to start boosting your returns.
How Monthly Interest Works
Unlike savings accounts that pay interest annually, these high-yield checking accounts calculate and pay out interest on a monthly basis. Here’s how it works:
– Daily Calculation: Interest is accrued and compounded daily based on your end-of-day balance.
– Monthly Payout: The total interest earned is credited to your account on the 1st of each month.
– Tax-Free: Interest is paid without any tax deducted. You’ll need to declare and pay tax separately if your total interest exceeds your Personal Savings Allowance.
– FSCS Protection: All funds up to £85,000 are protected under the Financial Services Compensation Scheme.
The monthly payout structure means you can immediately access and use your interest earnings, rather than having to wait a full year. Plus, the interest is calculated in your favor on a daily basis.
Tracker vs. Fixed Rates
Another key difference between these new high-interest accounts is whether the rate is variable (tracking the Bank of England base rate) or fixed.
Kroo Bank offers a variable 2.65% AER that adjusts within 2 working days of any base rate change. So you’ll always be earning the current market rate.
In contrast, Nationwide FlexDirect pays a fixed 5% AER for the first 12 months, then drops to 1% thereafter. This provides a higher initial yield, but less flexibility if rates rise.
Both options have merit depending on your goals and risk tolerance. The fixed rate gives you certainty, while the tracker lets you fully capitalize on base rate hikes.
How to Switch & Maximize Earnings
Ready to start earning more on your checking balance? The switching process is quick and easy:
1. Open your new high-interest account online or in-branch. Many providers offer cash switching bonuses of up to £175.
2. Use the bank’s Current Account Switch Service to transfer your direct debits and standing orders. This usually takes around 7 working days.
3. Close your old account, making sure to move over any remaining balance.
Once set up, you can start earning interest on your full balance from day one. Use our calculator to see exactly how much you could earn in 12 months:
Interest Calculator
Calculate earning potential on UK current accounts.
FAQs
Do checking accounts pay more interest than savings accounts?
Yes, many high-yield current accounts now offer superior returns compared to standard savings accounts. The top rates reach up to 5% AER, far outpacing the typical 0-2% on easy-access savings.
Is the interest I earn on my checking account taxed?
Interest paid on your current account is subject to the same tax rules as savings. You have a £1,000 Personal Savings Allowance before tax applies. Anything over that will be taxed at your marginal rate.
Is my money protected in a high-interest checking account?
Yes, all UK banks covered by the Financial Services Compensation Scheme (FSCS) protect up to £85,000 per person, per banking group. This includes the top accounts featured.
So what are you waiting for? Switch to a high-interest current account today and start maximizing the returns on your everyday banking balance. With top yields of 5% AER, it’s time to make your checking account work harder for you.
