It pays to use online-only accounts

Branch-based bank accounts can be convenient, but for the best rates you need to go online, says Ruth Jackson. Plus, a round-up of the rest of the week's personal finance news.

Northern Rock has launched a new 90-day notice branch-based account paying 2.5% interest on balances from £1. The account beats the branch-based accounts on offer from other big banks, says Patrick Collinson in The Guardian. Halifax pays 1.5% for the first year on its Guaranteed Saver Reward account, but that drops to 0.5% after a year.

But you could do better with United National Bank's branch-based notice account, which pays 3.02%. For the best returns you should look at internet-only accounts. Their rates tend to be higher as the running costs are lower.

Cash is going out of fashion. We are increasingly using cards to pay for things instead. A report from the Payments Council has shown that while 60% of transactions still involve cash, eight in ten of those are for amounts under £10. The Payments council anticipates that by 2015 cash will be used in under half of all transactions.

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Bad news for anyone with a student loan. The interest rate on such loans is based on March's Retail Price Index (RPI) inflation figure. Since September when the rate changes each year this has meant a rate of 0%, due to last March's deflationary figure. But last month's RPI was 4.4%, which could mean a big hike in interest rates in September.

There is hope though. Loans taken out since 1998 are meant to pay a rate of interest that is based on the lower rate of either March's RPI figure (4.4%), or the base rate of a range of banks plus 1% (currently 1.5%). So hopefully the rate will only go up to around 1.5%, but the government won't confirm that until August. Either way, interest rates on student loans are going up.

Get 30% off at Gap. Simply visit and register your details and you'll get a voucher for 30% off. Sadly, such a good deal comes with plenty of terms and conditions. You can't use the voucher on Product (RED) items; leather goods; 100% cashmere products; Gap Design Editions; babyGap Home, or gift cards. But if you are just looking to buy standard clothes, make use of this voucher until Sunday 2 May.

Ruth Jackson-Kirby

Ruth Jackson-Kirby is a freelance personal finance journalist with 17 years’ experience, writing about everything from savings and credit cards to pensions, property and pet insurance. 

Ruth started her career at MoneyWeek after graduating with an MA from the University of St Andrews, and she continues to contribute regular articles to our personal finance section. After leaving MoneyWeek she went on to become deputy editor of Moneywise before becoming a freelance journalist.

Ruth writes regularly for national publications including The Sunday Times, The Times, The Mail on Sunday and Good Housekeeping among many other titles both online and offline.