New TSB current account pays 5pc

"Customers are permitted to have a maximum of two accounts, so TSB could see an influx of consumers opening two Plus accounts and earning 5pc on a combined £4,000 balance, viewing it as an alternative to poor paying instant access savings accounts", he said.

Other features on the account are less attractive. Overdraft interest is charged at a relatively high rate of 19.94pc, and there is a monthly £6 charge for using an authorised overdraft.

Overseas card use is also more expensive than on other current accounts. All purchases and cash advances will incur a 2.99pc transaction fee, plus a £1 non-sterling fee will apply to all card purchase made abroad.

More: TSB Current Accounts

TSB's existing current account, Enhance , offers a lower rate of interest of 3pc on balances between £3,000 and £5,000. Customers with bigger pots could benefit more from this account. On a balance of £5,000, basic-rate taxpayers would earn £120 over the year, while higher-rate taxpayers would accrue interest of £90.

Research by Moneycomms shows that TSB Plus ranks second behind Halifax's Reward Current Account for an average balance of £500, while it comes out top for balances of £1,000. It falls to fifth place for account balances of £5,000. See table below for more details.

Mr Hagger said: "The credit interest element on the Plus account is quite generous, particularly as it is not a short term introductory offer, although the account may be exploited by savers in search of a decent return.

"However it’s almost as if the TSB account revamp process is only half complete as it still maintains the uncompetitive baggage from the old Lloyds era meaning that unlike M&S Bank this account is not an all-rounder and one to steer clear of if you want a cheap overdraft or low cost debit card transactions when holidaying abroad," he added.

^{Source: Moneycomms.co.uk (10.03.2014) ** assumes account doesn’t go overdrawn in 12 month period}

^{*** - £2 monthly fee for this account}

TSB has faced a number of problems since its split from Lloyds in September 2013 and was rated worst for customer service in a survey my MoneySavingExpert last month.

The bank's chief executive Paul Pester said he was "not surprised" that so many of the 4.6 million TSB customers were upset and had rated the bank badly in the poll.

"Given what we had to put our customers through last year to create TSB, and given the well-publicised failure in Lloyds Banking Group's systems which affected our customers, I'm not surprised some customers are upset: I would be", he said.

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