HALIFAX has slashed the rates on some popular high-interest current accounts by more than a percentage point while increasing overdraft rates.

The decision to raise overdraft rates comes despite the fact that the Bank of England has been cutting interest rates.

Nationwide, the UK's largest building society, cut interest rates on credit balances by a quarter point last week following the 0.25 percentage point cut to Bank rate last month. However, it did not reduce overdraft rates accordingly.

Intelligent Finance, owned by HBOS, Lloyds TSB and Norwich & Peterborough building society also cut rates but failed to pass on the cut to customers who use their overdraft while cutting rates on credit balances.

Cumberland, Norwich & Peterborough and Leeds building societies have cut credit interest rates by up to 0.30%.

Halifax cut the rate on its Ultimate Reward Account and High Interest current account from 6.17% to 5.12%, paid on the first £2,500 balance. It increased overdraft rates on its standard current account from 18.9% to 19.5%.

Samantha Owens at financial data provider Moneyfacts, said: “Halifax's high-interest current account is a very popular account as it is one of the few that does not include a bonus.

“It is disappointing to see one of the market leading current accounts cut its credit interest rate by such a large amount. Savers would be better off in Coventry's First account, which still pays 5.46% and does not include a bonus.”

Higher credit interest rates are available elsewhere with lower funding requirements, but these include bonuses.

Alliance & Leicester's Premier Direct current account offers 8.19% with only a £500 minimum monthly deposit, however there is a one-year bonus after which it reverts to Bank rate less 1% - now 4%. Abbey pays at 7.72% but this includes a one-year bonus, after which the rate reverts to 2.47%.

Times Recommends

• Lies and cover-up at MG Rover exposed by report
• High oil prices push manufacturing costs up
• Primark founder steps down as chief executive