Santander has upped rates across a range of its savings accounts, in a move that puts many of its high street rivals to shame.
The bank, home to 5.4million UK customers, has announced new and improved deals on a range of fixed bonds, easy-access and Isa accounts.
Santander’s easy-access eSaver account has increased from 0.25 per cent to 0.75 per cent, placing it well ahead of most other high street banks that typically pay between 0.01 per cent and 0.25 per cent in what This is Money dubs as ‘insult accounts.’
While this is not a best buy, with the top offer 1.4 per cent in our independent tables, it is still a step in the right direction from a major bank after five base rate rises in six months.
Santander, which is home to 5.4m UK customers, has announced new and improved deals on a range of fixed bonds, easy-access and Isa accounts.
However, Santander’s existing savers will need to open a new account, as it is a new issue rather than a change to an existing issue.
It’s also worth noting that Santander’s e-Saver is different from the bank’s everyday saver which continues to pay just 0.1 per cent – although both offer easy-access.
Santander’s fixed rate bonds have seen the biggest rises.
Its one-year deal has risen from 0.7 per cent to 1.4 per cent, while its two-year and three-year deals have both risen by more than one percentage point and now pay 1.9 per cent and 2.4 per cent respectively.
Those who have a Santander 123 account will have access to fixed rate equivalents paying 0.1 percentage points more.
Again, these are best buys, with savers able to now bag 3.05 per cent over two years, but it is much more generous than other high street banks.
For example, HSBC pays 0.45 per cent on its one-year deal whilst Lloyds and Halifax pay 0.8 per cent for a two-year deal.
For those looking to ensure any interest they earn is tax free, Santander has also boosted its two year cash Isa deal from 1.3 per cent to 2 per cent,
The bank has also announced that from today its current account customers will be able to open a regular savings account paying 2.5 per cent for 12 months.
The account, which can be opened online or via the mobile app, will allow up to £200 to be stashed away each month, up to a maximum of £2,400 a year.
Someone saving the maximum amount each month could expect to have earned £32 in interest over the course of one year.
It’s worth noting that First Direct, NatWest and RBS all offer higher rates on their regular savings deals – 3.5 per cent and 3.3 per cent respectively.
| Provider | Best Easy-access rate | one-year fixed rate | two-year fixed rate |
|---|---|---|---|
| Santander | 0.75% | 1.4% | 1.9% |
| HSBC | 0.1% | 0.45% | 0.5% |
| Lloyds Bank | 0.2% | NA | 0.8% |
| Halifax | 0.25% | NA | 0.8% |
| NatWest | 0.1% | 0.4% | 0.4% |
| RBS | 0.1% | 0.4% | 0.4% |
| TSB | 0.15% | 0.81% | 1% |
| Barclays | 0.01% | 1% | 1.3% |
What does this mean for savers?
Although the 0.75 per cent rate falls well short of the best easy-access deals on the market, which pay 1.4 per cent or more, Santander’s rate rise could be an early sign that the big banks will have to start fighting for customers.
Savings rates at the top of the market have been hurtling upwards fueled by competition among challenger banks and building societies.
However, rather than prompting a mass savings migration, many savers have remained loyal to the big banks despite their reluctance to boost rates.
Almost £1trillion of savings is sitting in easy access savings, according to the latest bank of England figures, and yet, more than half of the cash sashed in these accounts earn 0.1 per cent or less, according to analysis by Paragon Bank.
James Blower, founder of The Savings Guru said: ‘It’s good to see Santander improving rates for its savers and, while there are better rates on the market, they put their rival big banks to shame, many of whom have failed to pass on any of the five base rate increases since December.
‘What’s interesting about the move is some of the increases are substantial, and much more than recent rate base rate.
‘Easy-access best buys are up 50 per cent this year and one-year rates have almost doubled.
‘These moves from Santander could be a sign that competitive pressures are driving them with savers responding to the market increases and shopping around.
‘It will be interesting to see if it prompts some of the big four to follow suit and move too.’
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THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS
Lloyds Bank’s Club Lloyds account will pay £125 when you switch. There is a £3 monthly fee but this is waived if you pay in at least £1,500 each month. You also earn monthly credit interest on balances up to £5,000 and can choose a reward each year, including 6 cinema tickets.
Virgin Money’s M Plus Account offers £20,000 Virgin Points to spend via Virgin Red when you switch and pays 2.02 per cent monthly interest on up to £1,000. To get the bonus, £1,000 must be paid into a linked easy-access account paying 1% interest and 2 direct debits transferred over.
HSBC’s Advance Account pays £170 when you switch to the account. You need to set up two direct debits or standing orders and pay in at least £1,500 into the account within the first 60 days.
First Direct will give newcomers £150 when they switch their account. It also offers a £250 interest-free overdraft. Customers must pay in at least £1,000 within three months of opening the account.
Nationwide’s FlexDirect account comes with up to £125 cash incentive for new and existing customers. Plus 5% interest on up to £1,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both the latter perks last for a year.
Santander, a major bank in the UK, has recently increased the interest rates on a range of its savings accounts, including fixed bonds, easy-access accounts, and ISAs. This move sets Santander apart from many other high street banks that typically offer lower interest rates on their savings accounts. For example, Santander's easy-access eSaver account now offers an interest rate of 0.75%, compared to the typical range of 0.01% to 0.25% offered by other high street banks [[1]].
Santander's fixed rate bonds have also seen significant increases in interest rates. The one-year bond now pays 1.4%, while the two-year and three-year bonds pay 1.9% and 2.4% respectively. Customers who have a Santander 123 account can access fixed rate equivalents that pay 0.1 percentage points more [[1]].
In addition to these changes, Santander has also increased the interest rate on its two-year cash ISA from 1.3% to 2%. This provides an option for savers who want to ensure that the interest they earn is tax-free [[1]].
It's important to note that existing Santander savers will need to open a new account to take advantage of these improved rates, as they are part of a new issue rather than a change to an existing issue. It's also worth mentioning that Santander's e-Saver account is different from its everyday saver account, which continues to pay just 0.1% interest, although both accounts offer easy-access [[1]].
While Santander's rate increases are not the highest available in the market, they do demonstrate a positive step from a major bank after five base rate rises in six months. This could be an early sign that big banks will have to start competing for customers by offering more competitive rates [[1]].
Overall, Santander's rate increases on its savings accounts provide savers with better options compared to many other high street banks. However, it's always a good idea to compare rates and terms across different banks to find the best option for individual savings goals and circ*mstances.
