Digital challenger bank Zopa has updated its Biscuit current account with a selection of three new perks for customers. These enhancements include a boosted 2.75% interest rate on current account balances and a choice between 3% cashback on eating out or 3% cashback on bills.

Simultaneously, Zopa has reduced the standard interest rate on current account balances from 2% to 1% and discontinued its 7.1% regular saver for new sign-ups. Existing customers with the regular saver can continue to deposit and withdraw funds, but upon completion of its six-month term, funds will be transferred to an easy-access pot earning a variable 2.95% interest.

Rates scrutineer Moneyfacts has identified the Biscuit account as a competitive option within the top 10 compared to its peers. Caitlyn Eastell, a personal finance expert at Moneyfacts, noted its standing among comparable accounts.

Previously, the Biscuit account offered a 2% interest rate on current account balances for 12 months, the 7.1% regular saver, and 2% cashback on direct debits up to £30 annually. The regular saver, by allowing monthly deposits of up to £300, could yield approximately £137 after a year. The cashback offered up to £30 annually for monthly direct debits of £125.

The new perk options for Biscuit account holders are:

  • An uncapped 2.75% variable interest rate on current account balances, an increase from the previous 1% standard rate.
  • 3% cashback on eating out, applicable to up to £150 of monthly spending, capped at £54 annually. This includes spending at restaurants, takeaways, and bakeries.
  • 3% cashback on bills, also on up to £150 of monthly direct debits, capped at £54 annually.

All Biscuit account holders also receive a complimentary monthly barista-made drink from Caffè Nero and benefit from fee-free spending abroad.

While the new perks offer potential value, experts advise against holding significant amounts in current accounts, suggesting dedicated easy-access savings accounts for better rates. For example, Spring's Accelerate Saver offers 5% on balances between £1 and £5,000. For those willing to take on investment risk for potentially higher returns, investing is another avenue.

In terms of cashback, other providers offer higher rewards. Chase, for instance, provides 2% cashback on everyday spending, including groceries, restaurants, and transport, up to £20 per month. To qualify for this cashback, Chase customers must spend at least £1,000 monthly using their debit card and maintain £1,000 in Chase savings accounts. This allows for a potential annual cashback of £240. Combining accounts, such as a Zopa account for bills cashback and a Chase account for general spending cashback, could maximize rewards for savvy consumers.