Get £300 free cash from your current account

Interest rates may have fallen, but there are some current accounts that pay you the equivalent of 10% interest, or even 30% with a little clever accounting!

As you may remember, interest rates fell rapidly once the credit crunch took hold, and they've remained low due to the recession. However, in your current account today you can get returns that beat the best interest rates that were available pre-credit crunch!

Before I get to that, let me show you how the top current account interest rates have evolved over the past four years:

Top interest-paying current accounts in the past four years

All data from lovemoney.com. I've excluded banks with onerous and costly catches.

As you can see, the best interest rate rose from about 5% in 2006 to 8% pre-credit crunch in 2007. Alliance & Leicester was offering even more than that a year later in summer 2008, but this quickly changed as the base rate plummeted to 0.5%.

Today, the same bank still offers the market-leading current account, paying the highest interest rate - but that rate has shrivelled to 5%. If you like the sound of it, make sure you don't confuse it with the bank's many other accounts. Its full name is the Alliance & Leicester Premier Direct Current Account. What a mouthful!

That rate of 5% is more than the top easy-access savings account is paying right now, and a lot more than the rate of inflation, which is currently negative.

The 5% is paid on balances of up to £2,500. Your balance obviously goes up and down as you receive income and spend money, but if your average balance during the month is £1,250 (a reasonable estimate if you pay in around £2,500pm) you'll get yourself £60 or so before tax. That is £50 after tax for a basic-rate payer and £37.50 for a higher-rate payer.

That wouldn't pay for a new set of teeth, but it's better than a kick in them. It's also better than letting your existing bank borrow from you for free whilst it lends it out to others, which is what it's doing with the money in your bank account at the moment.

Or you could get £100 after tax now!

Well, not right now, but within a few months. Alliance & Leicester has a different current account that pays you £100 within four months of you opening it. This account is called the Alliance & Leicester Premier Current Account. (Beware: the only difference in the name of this account is that the word 'direct' is missing.)

This payment is the equivalent of 5% AER on £2,500 of savings for a basic-rate payer and 6.7% for a higher ratepayer.

More realistically, I think most basic-rate payers will have £1,250 or less in their accounts, on average. This means you're looking at the equivalent of 10% AER! Extraordinary that you can earn more this way than you could with the top interest-paying account two years ago, when the Bank of England's base rate was ten times higher.

Another advantage is that you know exactly what you'll get out of it, and it's an excellent return. With interest-paying accounts, you're relying both on your account being full of money and on the interest rate not being reduced.

On the downside, you must use the bank's switching service to move all your direct debits and standing orders, and keep paying at least £500 in each month. You can't get the account if you already hold a current account with Alliance & Leicester, Abbey, Cahoot or Cater Allen, which are all owned by Santander.

Alliance & Leicester claims this £100 deal is ending on 28 May. It did remove the same deal a few months ago and then bring it back again. Maybe it'll repeat that exercise, but I think we should assume it's not crying wolf (although our Consumer Head of Finance, Ed Bowsher, disagreed with me on his blog).

You could get £300 tomorrow!

Even more extraordinary is the fact that, a few months later, you can do it all over again. Once your qualifying four months with Alliance & Leciester are up and you've earned your first £100, you can switch to First Direct and you'll be able to earn another £100!

You'll again have to use its switching service to transfer your direct debits and standing orders. It'll also have to receive your salary of at least £1,500 per month.

However, if you don't like its service or are just plain greedy, you can leave in six months' time and First Direct will give you another £100 as an apology!

That means, if you claim the whole lot from both banks, you'll get £300 in a year. So a typical basic-rate payer would earn the equivalent of around 30% AER!

You might not even expect that sort of return when investing in shares during a good year.

Double your gain if you're married

With not even an A level in Accounting, married couples can double their bonuses. All you need to do is open two separate accounts instead of a joint one. I reckon £600 should pay for a nice week in Cornwall - or even some rudimentary dental work.

Again, you must read the small print and all letters you receive to ensure you follow the instructions of each current account to claim the cash. The conditions aren't difficult or onerous, but if you forget to claim the money in the right way, then it's lost.

> Make the cash gifts stretch further by saving it in a top savings account, available through lovemoney.com

> Wondering where we are with that bank charges thing? Read Further delay on bank charges case for the latest.

> Read how to Earn 6% and more on your monthly savings!