Santander customers are set to see a cut to the bank’s top easy-access saver in a matter of weeks, from 5.2% to 4.2% AER.
Does the cut still mean your cash is earning the best possible rate on savings? What are the best savings accounts returning right now, and should you stick or move your savings?
The provider upped the rate on its easy-access savings account in early September last year from 2.5% to 5.2%, making it one of the top savings rate offered in 14 years at the time.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Get 6 issues free
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
The saver topped the best buy tables, and due to high demand Santander pulled the top rate on 12 September- five days before it was set to come off the market.
But it remained available for existing customers who bagged the top rate before 12 September, with the rate fixed for 12 months from when the account was opened.
However, the lender notified existing customers back in March that the rate is set to drop in May – giving them two months' notice. The rate cut is one of six money changes to watch out for in May.
We have all the details on when the new rate will come into play and how it will compare to the rest of the savings market.
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, just before the Bank of England announces the new base rate tomorrow (9 May).
Though easy-access savings rates have been falling steadily, fixed savings are seeing more changes. For example, In January the top one-year fixed rate was 5.46% by SmartSave. Now, one-year fixed deals are returning just below 5.2%.
It raises the question of whether you should keep your cash in with the high-street bank, or switch to another savings account now.
Can you bag a better rate on the savings market?
Currently, you can beat Santander’s new 4.2% rate (coming into effect on 20 May) and 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.
If you are prepared to fix your cash for a year, the best one-year fixed savings accounts are returning slightly less than the top easy-access saver, but in the long term it could outdo variable rates. Plus, you will have some certainty on the return for a year.
Currently, SmartSave is the best one-year fixed deal offering 5.18% AER on a minimum deposit of £10,000.
If you’re looking for a lower minimum deposit, you can open a one-year fixed account with Atom Bank, returning 5.15% AER and you can start saving with £50.
Two in five Brits won’t be able to cover basic costs in retirement
Filtronic: a UK success story cashing in on the space race
