Current account holders will see the interest rate rise from 3.33% AER to 3.6% AER (3.54% gross variable) with balances up to £85,000 protected under the Financial Services Compensation Scheme (FSCS).

The rate rise will be automatically applied from 1 June 2023 for existing customers, while newbies to the account from this date will also gain the higher rate. Kroo confirmed interest is added to accounts each month.

It comes just two months after Kroo upped the rate from 3.03% to 3.33% and after its launch in December 2022 when it offered a then market-leading 2%.

The digital challenger attracted 42,000 bank account customers in the first three months of operating, however it struggled with demand in February after a shout out on TV.

Socially consious but not market leading

With each bank account that is opened, Kroo plants two trees. However, even with its socially-conscious credentials, savers can get a better rate elsewhere.

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Another fintech firm – Chip – is paying a market-leading 3.71% AER (3.65% gross) on its Chip Instant Access Account.

In fact, Shawbrook Bank also slides in above Kroo in the best buy easy access savings tables, according to Savings Champion data. The bank offers 3.65% AER, though it has a minimum opening balance of £1,000.

Kroo said that as well as passing on the latest Bank of England base rate rise, it also wants to encourage savers to read the fine print when it comes to banking products to “encourage transparency”.

CEO of Kroo, Andrea de Gottardo, said: “To change the banking industry for the better, we provide customers with a fair rate on their current account with a straightforward, no strings attached experience that they deserve from their bank.

“It’s important for customers to be reading the fine print to understand what they’re really buying into and make an informed decision on who they’re banking with. Increasing trust from both an educational and regulatory standpoint improves consumers’ access to more competitive products, allowing them to feel more confident in the deal they’re getting long term.”

Related: From Kroo to Monzo: Fintech challenger bank current accounts compared