Rates will rise by between 0.15% and 0.5%, and the lowest interest rate on an on-sale savings account will now be 2.5%.
Some savings products will be pulled from sale while others will be renamed, in an effort to simplify and streamline the product range.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Customers with a Santander Easy Access Saver or Easy Access ISA will be able to access their accounts via all channels: online, in branch and telephone banking. Previously, these products could only be managed online.
The overhaul has been done to meet the Consumer Duty rules, a new regime from the Financial Conduct Authority aimed at putting customers’ needs first. It will be introduced on 31 July. There could be more changes to come from banks, insurers and other financial providers as firms strive to prove that they are delivering good outcomes and fair value for consumers.
Santander boosts interest rates
The Santander changes all come into effect today. Its full range of savings products are now:
- Regular Saver (5% AER/gross for 12 months). This was previously called Regular eSaver.
- Fixed-rate ISA (4.15%-4.25% AER depending on term length)
- Santander Edge Saver (4% AER/gross for 12 months)
- Easy Access ISA (3.2% AER/tax-free variable for 12 months). This was previously the eISA.
- Easy Access Saver (2.5% AER/gross for 12 months). This was previously the eSaver paying 2%.
“We have a range of savings products to fit our customers’ different needs and we will continue to work with customers to ensure they are aware of our full range of accounts and can pick the right product for their needs,” said Andrea Melville, director of current accounts, savings and business banking at Santander.
Meanwhile, the interest rate on its Everyday Saver and Easy ISA will rise by 0.15%, from 0.85% to 1% for existing customers. From today, these products will no longer be available to new applicants;
A range of off-sale savings accounts will also have their interest rates hiked from 0.85% to 1%.
Anna Bowes, co-founder of the savings website Savings Champion, said she welcomed Santander increasing the rate on its on-sale easy-access account and making previously online-only accounts available to branch and telephone banking customers too. However, she added: “Existing customers also need to check what they are being offered, for example, the Everyday Saver, which was the key easy-access account available via branch as well as online until today, has been removed from sale and the rate has only increased from 0.85% to 1%. S, the devil is in the detail. You may be able to improve the interest you are earning, but you’ll need to be proactive.”
How to check what rate you are on with Santander
Santander UK has about 14 million active customers. It says it contacts customers rolling off their fixed-term products to let them know of the alternative savings products available. In addition, customers receive annual statements showing their interest rates, which are also visible when accessing online or mobile banking.
Alongside preparing for the Consumer Duty rules, banks have also been told to improve savings rates. The Bank of England has been steadily increasing interest rates - base rate is currently 5% - and while mortgage rates have soared, some banks have been accused of being slow to pass the rate rises onto savers, and essentially, of profiteering.
The average easy-access savings rate is currently 2.61%, while the average one-year fixed savings rate is 5.1%, according to the comparison site Moneyfacts.
Ruth is passionate about helping people feel more confident about their finances. She was previously editor of Times Money Mentor, and prior to that was deputy Money editor at The Sunday Times.
A multi-award winning journalist, Ruth started her career on a pensions magazine at the FT Group, and has also worked at Money Observer and Money Advice Service.
Outside of work, she is a mum to two young children, a magistrate and an NHS volunteer.
Rightmove: asking prices go up 0.9% in January
Mortgage rates remain high, but confidence appears to be returning to the housing market, with the latest Rightmove house price index data showing asking prices went up in January 2024.
By Katie Williams Published
MBNA unveils first ever savings product offering 5% return on cash - is it any good?
Credit card provider MBNA has entered the savings market with a one-year fixed account. How does the rate compare to other deals on the market?
By Vaishali Varu Published