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By Naomi Caine

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Does your current account pay a decent rate of interest when you are in credit? If you are in a standard account, then you probably earn a measly 0.1% on credit balances. But you could get as much as 5% if you made a switch - or an extra £71 a year on the average balance of £1,465.

Some of the latest range of current accounts also offer the chance to link up to a regular savings account that pays a high rate of interest - as much as 10% in some cases. But you have to pay into the savings account every month, usually for a year.

The latest current account from Halifax pays 5% on credit balances, sending it straight into the best-buy tables. It beats the Alliance & Leicester Premier Direct at 4.89% to take the top slot. But, as usual, you have to look behind the headline rate to check the deal on offer is really the best for you.

Let's start with the Halifax High Interest Current Account. You earn 5% on balances up to £2,500 and you have to pay at least £1,000 into the account each month. The restrictions are pretty standard - most banks impose some limits - and they are not too onerous.

But you might get caught out by the high overdraft penalties on the Halifax account. The authorised overdraft rate is 15.9%, or 28.8% for unauthorised borrowing. You could also be stung by a whopping £39 fee for bounced cheques or returned direct debits.
Customers with a Halifax current account can sign up for the bank's regular savings account and earn 7% on the maximum saving of £250 a month for a year. So you could earn maximum interest of £95.07.

The Halifax High Interest Account is undoubtedly a good deal for people who do not run up an overdraft. If you frequently slip into the red, you would probably be better off with one of Alliance & Leicester's Premier accounts.

You earn 4.89% on balances up to £2,500 on the Premier Direct, and you only have to deposit a minimum of £500 a month. But the account is run online. There are no printed statements and you get access to the branches only for deposits and withdrawals above £250. The interest rate also drops to one percentage point below the base rate in June 2007. So you would get 3.5% at today's rate.

However, the overdraft rate is the best on the market. You pay no interest on overdrafts up to £2,500 for the first 12 months. The rate is then 5.9% - and it's the same for authorised and unauthorised borrowing.

If you don't want to run your account online, you could switch to the Premier Account. You don't get such a good rate on credit balances: it pays just 1.49% up to £2,500. The overdraft rate is also slightly higher at 7.9%, but it's still one of the lowest rates around.
Alliance & Leicester also has a regular savings account that pays high interest. You get 10% fixed for a year on the maximum monthly saving of £250.

Nationwide's FlexAccount is a good all rounder - and great for frequent travellers. You get a respectable 4.25% if you are in credit - and it's up to a balance of £3,000. You have to pay in the usual minimum of £1,000 a month. The overdraft rate is also good at 7.75%, but you pay 24.9% for unauthorised borrowing.

Customers who regularly travel abroad should seriously consider switching to the FlexAccount because Nationwide doesn't levy such steep foreign usage fees on its cards as its rivals. Abbey offers an eye catching 6% on credit balances but it's a tricksy account that seems to give with one hand and take with the other.

For example, the 6% rate is not available to the bank's existing customers and new customers only get the high rate on deposits up to £1,000. Plus, the rate falls to 2.47% after 12 months.

Abbey's overdraft rate is 16.9%, which is comparatively high. You can opt for a lower rate of 9.9% - but you will then earn credit interest of only 0.1%. But current-account customers can link up to Abbey's regular savings account, which pays 8% on an initial deposit of £500 plus monthly contributions of £250 for two years.

Lloyds Classic Plus is another current account that potentially pays high credit interest. You have to pay in the usual minimum of £1,000 and get 3.93% on balances up to a generous £5,000. Plus, you get access to the bank's 8% monthly saver account.
But the Classic Plus account is run on the internet - and you have to log onto the bank's site at least three times in three months to get the high rate. And don't expect a cheap overdraft. The authorised rate is 15.5%, or 29.8% unauthorised.

"The Halifax account offers a good deal for people who are always in credit," says Sue Hannums of Chase de Vere, an independent financial adviser. "If you go overdrawn regularly, Alliance & Leicester and Nationwide both have a low overdraft rate."
So chances are, you should get switching.