Santander has boosted the rate on its easy-access savings account to now pay 3 per cent.
This is just below the average easy-access rate which sits at 3.17 per cent according to rate scrutineers Moneyfacts Compare, but even still, it is the best-easy access account offered by any of the big banks, outside of other brands that they own – we explain more below.
Savers will also only receive the 3 per cent rate so long as they don’t withdraw their cash more than two times in a 12 month period from the limited access saver.
If savers make a third withdrawal, they will be penalised by receiving a lower rate on their savings – receiving 1.2 per cent for a full month instead of the higher 3 per cent rate.
Santander now has the best easy-access account offered by a big banks, but it still only pays 3%
The account can be opened with a deposit of £1 and through mobile banking, online banking, or in branch.
Just a few months ago, Santander offered an limited easy-access account paying a table-topping 5.2 per cent interest rate, so it will be a blow to savers hoping for big banks to offer competitive interest.
The limited easy-access saver was pulled early due to soaring demand.
This weekend, This is Money revealed that five of the biggest banks still continue to pay as little as 1.4 per cent on easy-access deals.
There is a huge gap between the best buy account and the flexible easy-access rates offered by Barclays, Lloyds, HSBC, NatWest and Santander and the Bank of England base rate.
On £10,000 savings, Moneyfacts figures show these banks’ flexible easy-access accounts pay an average interest rate of just 1.85 per cent.
James Blower, founder of website Savings Guru, says: ‘Savers who want to go with big banks should look at accounts like Cahoot’s 5.2 per cent easy-access (part of Santander) which is for savers with up to £3,000 to save.
‘There is also Ulster Bank (part of NatWest) for savers with larger balances – also paying 5.2 per cent.’
On £3,000, the Cahoot account gives savers £160.40 interest versus £91.25 with Santander’s 3 per cent.
The tipping point comes at about £5,200 – savers with Santander would earn more than at Cahoot, as Cahoot offers no interest on balances above £3,000.
In an unprecedented move, Metro Bank now offers the best easy-access account on the market, paying a rate of 5.22 per cent.
The bank also offers the best one-year fixed-rate account, which pays a rate of 5.91 per cent.
One savings expert says the ‘aggressive pricing’ of Metro Bank’s best buy accounts suggests the bank is trying to bring in cash deposits through retail and business savers.
That comes after customer deposits fell 5 per cent in the third quarter.
The FCA set out a plan to crack down on banks offering the lowest savings rates under the Comsumer Duty, to ensure they were being fair when passing on the base rate to savers.
Blower says: ‘This move is undoubtedly influenced by Consumer Duty. The big banks have responded by making improvements to some savings rates. They are trying to do just enough to placate the regulator here.’
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