The best savings deals have been flying high but Santander customers are set to see a cut to the bank’s top 5.2% easy-access saver in a matter of months.
The lender upped the rate on its easy-access saver back in early September from 2.5% to 5.2%, making it the best savings rate offered in 14 years at the time.
The saver topped the best buy tables, and as expected, demand came flooding in. As a result, Santander pulled the top rate on 12 September- five days before it was set to come off the market.
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But it remained available for existing customers who bagged the top rate before 12 September.
However, the lender has announced that the rate for existing customers will also fall in a few months.
We have all the details on when, the new rate and if now is a good time to switch your savings account.
Santander to cut easy-access savings rate
The lender is set to cut the rate on its handsome 5.2% easy-access saver to 4.2% AER for existing customers.
The rate will drop on 20 May 2024.
Currently, savers can deposit up to £250,000 in the account and earn up to 5.2%.
If you earn the 5.2% rate right now, you will have received a two-month notice from Santander via email or by post regarding the new rate.
The lender has confirmed it is dropping its top rate due to “current market conditions.”
MoneyWeek has been tracking the best savings deals on the market and has noticed rates fluctuating up and down- with one easy-access deal pulled in March, whilst three lenders upped their rates.
It raises the question of whether you should keep your cash in the saver and switch in May, or switch to another savings account now.
Is now the time to switch to a better rate?
Currently, you can earn up to 5.2% on the best easy-access savings account on the market- mirroring Santander.
The saver actually comes from a division of Santander called Cahoot. Though, the catch is the rate is only available on balances up to £3,000. Any sum above that receives no return.
Ulster Bank (part of the NatWest group) is also offering 5.2% on its loyalty saver- open to new customers too. But it requires a minimum deposit of £5,000.
But, one of the biggest caveats with an easy-access account is that the rate is variable- which means it can change at any time depending on market movement.
The fact that Santander is already putting the feelers out for a rate cut in May could indicate that lenders are preparing for a base rate cut- as experts predicted.
Mark Hicks, head of Active Savings at Hargreaves Lansdown says the reason behind lenders dropping rates is “because they expect the Bank of England to cut interest rates this year.
“This will drag down variable savings rates, so those who have fixed at 5% - or just under – will be very grateful they locked in a better rate while they could.”
One-year fixed deals are offering slightly more, with the top account SmartSave boasting a 5.28% return on a minimum deposit of £10,000.
MBNA is giving savers 5.27% on £1,000 or more on its new one-year fixed savings product.
If you don’t require flexibility with your cash, it could be worth fixing for a year to earn a top rate above 5% and have some certainty on the return.
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