LHV Bank has launched a new current account paying customers 4% AER interest, with “no strings attached”. The account, which pledges to track and pay the full Bank of England base rate until January 1, 2027, will pay interest on balances up to £1million.

Kris Brewster, director of retail banking at LHV Bank, said: “At LHV, we believe every penny in a bank account should earn interest and not sit idle. We’re proud to offer a current account that tracks the full Bank of England base rate, with no strings attached. If your current bank isn’t giving you a fair return, we are here for those who demand something better.”

LHV Bank said it has expanded the features of its app-based current account this year to support customers’ everyday banking needs. The features include:

• Direct Debits for bills and regular payments
• Apple Pay and Google Pay support
• Foreign currency transactions at the real Mastercard exchange rate

It comes as research suggests that around eight million current account holders retain balances of over £10,000, with millions of in-credit account holders earning no interest at all on their money.

Mr Brewster said: “Customers are being short-changed on their everyday money. We’re offering a fairer alternative that rewards customers without hidden conditions or gimmicks.”

The 4% AER will automatically adjust in line with any changes to the Bank of England base rate.

Commenting on the deal, Caitlyn Eastell, spokesperson at money comparison website Moneyfactscompare.co.uk, said: “This week, LHV Bank has launched a new Current Account offering customers 4% AER on balances up to £1 million. This rate is guaranteed to follow the Bank of England Base Rate until 1 January 2027.

“Adding to its appeal, the account does not charge a monthly fee, and customers can also benefit from paying no foreign transaction fees.”

However, she pointed out that customers should be aware that the account does not offer an overdraft.

Ms Eastell added: “Overall, the account earns an Excellent Moneyfacts product rating.”

LVH was founded in 1999 in Estonia as an investment company before receiving a banking licence in 2009. LVH UK was founded in 2021, before being granted a UK banking licence in 2023. It currently serves more than 400,000 customers.