What is a combined interest rate?

A combined interest rate is used when more than one interest rate applies to your savings. For example, accounts like Premium Saver or Savings Builder may offer both a standard rate and a conditional bonus rate. These rates are calculated together using a standard method to show the total interest rate payable on your balance.

 

How does it work?

 

The combined interest rate reflects how different portions of your balance earn interest at different rates. Here's how it works in practice:

Example 1: Balance of £15,000 in a Savings Builder account

• The first £10,000 earns interest at 0.25%
• The remaining £5,000 earns interest at 0.01%
• The combined interest rate for the full £15,000 is 0.17%

Example 2: Balance of £20,000

• The first £10,000 earns interest at 0.25%
• The next £10,000 earns interest at 0.01%
• The combined interest rate for the full £20,000 is 0.13%

 

Why does the combined rate decrease with a higher balance?

 

As more of your balance earns interest at the lower rate (e.g. 0.01%), the overall or combined interest rate becomes lower. This is because the higher-rate portion (e.g. 0.25%) applies only to a limited part of your balance.