Santander launches a wave of best buy savings rates

Santander has launched a wave of best buy savings rates, including a top easy-access account paying 2.75 per cent.

A selection of top paying fixed rate deals have also been launched by Cahoot, an internet-only subsidiary of Santander.

The rate hikes mark a change in approach from a major bank. Over the past year,  the big banks have had no inclination to fight for savers cash or play fair on rates.

Up until now, the majority of best buys have been driven by either smaller building societies or challenger banks and given the size of Santander, it is likely this will boost rate competition in the coming days. 

>> Check the best buy savings rates in our independent best buy tables 

Heading higher: Santander’s rate hikes set it apart from many other major banks which have refrained from passing on successive base rate hikes to customers

Santander’s easy-access deal pays a market topping 2.75 per cent on pots up to £250,000.

The online deal offers savers instant, penalty-free access to their cash and can be opened for just £1.

Santander says the deal is available until 1 November, but warns it may end sooner.

Someone with a £10,000 deposit in this account would earn £275 in interest after one year.

Its worth noting that the term of the account is 12 months. This means on maturity, Santander will transfer the account to its Everyday Saver, which currently pays 0.2 per cent.

So savers would be wise to move their money elsewhere when that time arrives.  

Anna Bowes, co-founder of Savings Champion says: ‘It’s really interesting to see some of the big banks and building societies back in the best buy tables. 

‘Santander has already had a good showing in the fixed rate Isa tables, but this new easy-access account paying 2.75 per cent is head and shoulders above the next best – and you don’t need to be an existing or current account customer to be eligible. Plus the maximum balance is £250,000.’

‘Barclays has a Rainy Day Saver account paying 5.12 per cent. This is an easy access account paying 5.12 per cent on up to £5,000 and 0.15 per cent thereafter. 

‘But you must be a Barclays Blue Reward customer and therefore have a current account with them.’

The easy-access deal is 0.25 percentage points more than Yorkshire Building Society’s limited access account which pays 2.5 per cent. However, Yorkshire’s rate is only on balances up to £5,000.

Therefore for many savers the next best deal on the market is Al-Rayan Bank which pays 2.35 per cent – 0.4 percentage points less than Santander. 

For those looking for fixed rate savings deals, Cahoot, which forms part of Santander’s banking network, is also now offering a range of new best buys.

Cahoot’s one-year fix deal pays 4.3 per cent, its two year-fix pays 4.7 per cent and its three year deal offers 4.8 per cent – the highest overall rate available.

Savers stashing £20,000 into Cahoot’s one-year fix will earn £860 in interest. 

Those opting for the three-year fix will earn £3,020 in interest over the three year period.

Savers looking to stash away £85,000 or more into one of these accounts need to be wary of overstepping their FSCS protection.

Cahoot, which shares a banking license with Santander is backed up by the UK deposit guarantee scheme. This means savers deposits will be protected up to £85,000 per individual, or in the case of a joint account – up to £170,000.

However, due to the shared banking licence, the FSCS limit will apply to all savings held with both Santander and Cahoot. Therefore an individual saver would be wise to avoid dividing more than £85,000 across both providers.

What about cash Isa rates? 

For savers looking to protect the interest they earn from the taxman, Santander has also launched an array of cash Isa deals.

The bank’s Isa deals some of the best rates on the market, including a market topping one-year, 18-month and two-year deal.

Its one-year fixed rate pays 3.7 per cent, its 18-month fix pays 4 per cent and its two-year fix offers a 4.2 per cent return.

Although its one-year and two-year fixed rate deals are matched by Shawbrook Bank and Gatehouse bank respectively, those transferring an Isa into one of Santander’s Fixed Rate Isa can also secure a £50 retail voucher.

Savers who prefer having easy access to their savings can earn 2 per cent via its eIsa deal.

Hetal Parmar, head of banking and savings at Santander UK, said: ‘We are delighted to boost returns on savings with best buy rates across a range of accounts that fit with different savings goals. 

‘Savers can choose the flexibility of easy access savings as well as guaranteed rates on tax-free Isas, all with the peace of mind that their money is earning a great return.’