Santander offers ‘top of market’ 8% interest rate savings account (Image: Getty)
Santander has launched a “top of the market” savings account with an 8% interest rate, designed to support new and existing customers looking to build a regular savings habit.
The Regular Saver includes a 5% AER bonus for one year, and allows customers to put up to £200 away per month. João Soares, head of savings at Santander UK, said: “We know customers want savings accounts that are easy to understand, offer a competitive rate and deliver value. That’s why our new Regular Saver rewards customers with a market-leading rate, while supporting customers who want to build up a habit of saving regularly.”
The account is designed to support new and existing customers build a regular savings habit. (Image: Getty)
After 12 months, the interest reduces to 3.00% AER/gross. According to the Spanish bank’s calculations, customers who choose to deposit the maximum amount each month could build up the following, including interest:
- £2,504 in year one
- £5,018 in year two
- £7,607 in year three.
These calculations are based on assumptions that the account is opened on the first day of the month and an initial payment of £200 is made on the second day of the month; You pay in a further £200 on the 2nd of each month afterwards; You don’t take any money out; and there is no change to the current interest rate.
The Regular Saver is exclusively available to all Santander current account customers, including customers with a Santander Everyday, Edge, Edge Student, Edge Up and Explorer current accounts.
New customers can also benefit from Santander’s latest switching deal, offering £180 when they switch to a Santander current account and meet the qualifying criteria.
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Regular savings accounts are a good option for those wanting to build a savings habit, as these accounts typically offer higher interest rates and generally encourage savers to make monthly deposits.
Savers need to meet certain requirements for their accounts, and they’ll earn interest on their savings provided they make minimal to no withdrawals and deposit regularly, depending on the terms of the account.
The minimum balance for Santander’s new Regular Saver is £1, and the account is limited to one account per customer. Customers must be 16 or over and live in the UK to apply.
Unlike most other regular savings accounts, Santander allows customers to make withdrawals penalty-free at any time from this account. You can also close your account at any time outside the 14-day cancellation period without being charged.
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Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Santander has shot to the top of the market with its new Regular Saver paying 8% AER, incredibly eye-catching for those looking to gradually build their savings pot. The 8% AER does include a 5% bonus for 12 months.”
She noted that, unlike other regular savers on the market that revert to a “flexible saver earning a much poorer return”, it will continue for another year, paying 3% AER.
Ms Springall continued: “It is great to see the account made available to both new and existing current account customers, including its fee-free Everyday option. Those who do want to switch their bank account to Santander can currently get £180 as a reward, when they use the Current Account Switch Service (CASS). The CASS moves over any balance and redirects both standing orders and direct debits to a new account.”
How does the savings account compare?
Zopa offers a 7.1% AER over six months, with a £300 per month limit, allowing savers to amass £1,800 in total. Interest is paid at the end of the term, with a full £1,800 deposit estimated to earn around £80.
Savers can withdraw funds from the Zopa savings account at any time without penalty. However, they’ll only be able to replace the money within the £300 monthly allowance. For example, if you withdraw £500 but want to put money back in, you can only deposit up to £300.
First Direct offers a competitive 7% AER over 12 months. The account allows a monthly deposit of £300, totalling £3,600 in savings over the course of a year. At the end of the term, savers will have £3,736.50, including £136.50 in interest. Withdrawals are not permitted until the term ends.
The Co-operative Bank is also offering a 7% AER on its Regular Saver (Issue 1) for 12 months.
Savers can put away up to £250 per month, building total savings of up to £3,000, which could earn up to £114.21 in interest. This account also offers greater flexibility, as people can withdraw funds without penalty.
Ms Springall said: “It is never too late for consumers to start putting some cash aside for any future goals, as those who save little and often can feel more in charge of their financial wellbeing.
“Regular savings accounts are ideal for slowly building a pot as they encourage the savings habit. However, consumers will need to work out if they are the right choice for them, as some accounts can be restrictive and might not be suitable for larger deposits.”