Santander relaunches 5% saver, but you’ll need a 123 account to get it
Santander has launched a new regular saver paying 5% interest, but only to those who hold a 123 account with the bank.
The bank had previously offered a 5% regular saver, but this was later withdrawn in favour of a 3% regular saver. However, the 3% saver has now been taken off sale with the relaunch of the 5% Regular eSaver product.
The Regular eSaver offers 5% interest if savers deposit up to £200 a month for 12 months. Paying in the maximum of £200 a month will earn interest of £64.33 over the year – giving a final balance of £2,464.33.
Those after the account need to be part of the bank’s 123 World programme – so holders of a 123 Current Account, 123 Lite Current Account, or 123 Credit Card – or Santander Select customers (those using its wealth banking service).
Non-123 account holders can also open a regular saver but will receive a lower 2.5% rate of interest.
At maturity the balance will transfer to an Everyday Saver account, currently paying 0.1% interest.
How does the competition compare?
First Direct, HSBC, M&S Bank and Nationwide also offer 5% regular savers to customers who hold their respective current accounts.
Nationwide customers can pay up to £500 a month into their regular saver while First Direct users can deposit £300 a month. HSBC and M&S Bank are limited to a £250 deposit each month, but this is still higher than Santander’s £200 maximum monthly pay-in.
The best regular saver not linked to a bank account is the Virgin Money Regular eSaver, which pays 2.25% on deposits of up to £250 a month.
Current accounts themselves have also become a popular way to save cash. The Nationwide FlexDirect account pays 5% interest on balances up to £2,500 for the first year, but this drops to 1% thereafter.
Tesco Bank’s current account pays 3% on balances up to £3,000 while TSB also offers 3% interest on its Classic Plus account, although this is only on balances up to £1,500. Each of these current accounts also has minimum pay-ins and other restrictions. For the full details, read Moneywise’s guide to the week’s best current accounts.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.