Halifax is preparing a dramatic overhaul of its Reward Current Account, one of its most widely held accounts.

From October 1, account-holders will be paid interest on balances – a move that effectively will bring free money to thousands.

Halifax will introduce 1% AER interest rate on balances between £1 and £3,999.99, and a higher 3% AER on amounts between £4,000 and £5,000. But there’s a catch: any balance above £5,000 earns no interest.

This means that if you have £4,500 in the account, you would earn £60 on the first £4,000, with 1.5% AER applied. The £500 leftover is subject to 3% AER adding an extra £15.

However, you must set up two direct debits and pay in at least £1,500 each month to avoid the £3 monthly account fee – otherwise the fee bites.

There are other perks too. Halifax’s Reward Current Account continues to offer fee‑free overseas spending and up to 15 % cashback at selected retailers via its Cashback Extras programme.

But don’t expect to be wowed by the scale of the benefits from Halifax.

Rival Nationwide’s FlexDirect account offers 5% APR on up to £1,500, while Santander’s Edge Up pays 2.5% on balances up to £25,000 – meaning many savers could earn significantly more elsewhere.

With inflation around 3.4%, the interest rates means money held in these Halifax accounts will shrink in real spending power, so it remains important for people to shop around.

Ultimately, if a saver is keeping £4,000–£5,000 in their current account and meet the conditions, Halifax’s new offer could yield up to £75 annually.

But if a saver has more cash or flexibility, there are superior options out there – some offering interest on far larger balances.