Santander Boosts Savings Rates

Santander is increasing interest rates across its range of savings products and makings its regular saver available to more customers, including those with free current accounts.

Santander’s rate updates make it one of the first high-street banks to pass on to savers the Bank of England’s five hikes in the base rate since December. 

While the base rate now stands at 1.25%, up from its emergency low of 0.1% during the pandemic, savings rates from mainstream banks have remained stubbornly low, often between 0.01% and 0.25%. 

Santander is bucking the trend and raising rates across its savings range, including easy-access accounts, fixed bonds, and ISAs.

Its easy-access eSaver account will now pay 0.75% for 12 months, up from 0.25%. However, make sure you’re opening the online eSaver. Santander’s Everyday Saver continues to pay just 0.1%, although both are instant-access savings accounts and can be easily confused. When your 12 months with the eSaver lapse, your balance will be automatically transferred to the Everyday Saver.

Additionally, if you already have an eSaver from Santander, you won’t benefit from the rate hike and will need to open a new account to take advantage of the higher 0.75%.

The 0.75% paid by the eSaver isn’t the highest rate you can nab if you look off the high street. Virgin Money’s M Plus account pays 1.56% AER, while Chase’s saver pays 1.5%. Those rates also don’t come with a 12-month expiry date.

Santander is also boosting rates on its fixed-rate bonds. But as usual, those who hold Santander 123 current accounts, will benefit from moderately better rates. 123 current accounts cost £4 per month. 

123 bonds:

• 1 Year Fixed Rate Bond will increase from 0.7% to 1.5% AER/Gross
• 2 Year Fixed Rate Bond will increase from 0.9% to 2% AER/Gross
• 3 Year Fixed Rate Bond will increase from 1% to 2.5% AER/Gross

Non-123 bonds:

• 1 Year Fixed Rate Bond will increase from 0.6% to 1.4% AER/Gross
• 2 Year Fixed Rate Bond will increase from 0.8% to 1.9% AER/Gross
• 3 Year Fixed Rate Bond will increase from 0.9% to 2.4% AER/Gross

Santander is also improving the rate on its two-year fixed-rate ISA from 1.3% to 2%.

The Spanish-owned bank is also making its Regular eSaver available to more customers. The Regular eSaver allows customers to deposit up to £200 per month, with a maximum annual balance of £2,400. It pays 2.5% AER for 12 months on that balance, or a maximum of £32.26 in interest.

Previously, the Regular eSaver was only available to customers of Santander’s paid, premium current accounts, the 123, Select, and Private accounts. Now customers of the free Everyday and Basic current accounts will also be able to open Regular eSavers.

Hetal Parmar, head of banking and savings at Santander UK, said: “Saving is important to many people for their financial wellbeing, whether it’s for a rainy-day, home renovations or something else. Santander offers a range of savings accounts, now boosted by some of the best rates from a High Street bank, to support millions of customers with their savings goals.”

Market watchers say that Santander's more generous rates could encourage other major high-street banks to raise their savings rates too.

Sources