Best savings rates: Santander boosts rates – will big banks follow?


Will big banks FINALLY start offering better savings deals? Santander boosts easy-access and fixed-rate accounts ‘substantially’

  • Santander’s easy-access eSaver account boosted to 0.75%
  • Most high street banks continue to pay between 0.01% and 0.2% for easy-access 
  • Its one-year fixed rate has risen from 0.7% to 1.4%
  • Its two-year and three-year deals also now pay 1.9% and 2.4% respectively 

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.

High Street Banks
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.’

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.

Santander

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.

Natwest

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.

Santander

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

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.

Barclays

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