Savers are being urged to take more interest in the rates paid by the new breed of high interest current accounts as payouts plunge dramatically the more you have in the account. Currently there are 12 accounts offering interest rates of five per cent or more, but the offers are only good for balances up to £2,500, according to MoneyExpert.com.

The independent financial comparison website found that just one of the accounts maintains the headline rate on balances above £2,500 – any cash above that earns a pathetic 0.58 per cent. The exception is Coventry Building Society’s First Account which pays out 5.6 per cent up to a maximum £250,000.

Savers with accounts such as Alliance and Leicester’s Premier Direct Account (8.19 per cent), HSBC’s Bank Account Plus (7.72 per cent) and Halifax’s High Interest Current Account (six per cent), need to realise that, beyond a couple of thousand pounds, they should not expect to see their cash grow rapidly.

Lenders paying over five per cent are still a rare breed – of the 102 current accounts on the market the average interest rate offered is just 1.78 per cent for deposits of £1.00 to £50.00. Among the 44 accounts paying one per cent interest or more, the market average is currently 4.04 per cent.

There are two other accounts which provide a consistently high rate of interest even on larger balances – cahoot pays out 3.65 per cent up to £249,999 and Yorkshire Bank’s Current Account Tracker pays four per cent. Yorkshire Bank’s account, however, is only open to customers with an income of £75,000 or more.

Sean Gardner, founder of MoneyExpert.com, says, ‘High interest accounts are a great addition to the market, particularly for those with modest balances who are looking to make their cash work harder. But customers need to remember that the tempting high rates are only effective for sums up to a point, normally around £2,500. If you’re keeping any more than that in your current account then you should look elsewhere.

‘Apart from the potential exception of the Coventry, cahoot and Yorkshire accounts, those looking for a substantial return on their cash are likely to be better off investing surplus funds in an ISA or savings account rather than letting it sit gathering dust.’