Santander has launched a new current account with a linked easy-access savings rate of 4 per cent on balances up to £4,000.
The new Santander Edge account also offers 1 pc cashback capped at £10 per month on supermarket and transport-based debit card spending.
It offers another 1 pc cashback, capped at £10 per month, for household bills. This includes council tax, energy, mobile, landline, broadband and paid-for TV packages.
Santander’s Edge account offers an easy-access rate of 4% on balances up to £4,000 and 1% cashback capped at £10 per month on supermarket and transport-based spending
The account costs £3 a month to run and is being launched alongside Santander’s already popular 123 and 123 Lite accounts.
Customers will be told they can keep either of the existing current accounts if they wish — but the 123 Lite account (costing £2 a month) will no longer be on sale to new customers.
So is the new Edge account any good? Money Mail puts it to the test.
How does the new account compare?
A Santander Edge customer who holds the maximum £4,000 in the linked savings account will earn £124 in interest after fees have been taken into account.
By comparison, the main 123 current account has a £4 monthly fee and pays 1.75 per cent interest on balances up to £20,000.
That means that in order to earn £124 after fees, you would need almost £10,000 in your account.
So for those with smaller balances, the Edge account may be a better option. The Lite account doesn’t have a linked savings rate.
To get the full £20 cashback available in total on the Edge account each month you would need to spend £1,000 a month on household bills and another £1,000 on supermarket shopping and transport costs.
Santander customers can use its online calculator to work out if the new account will make them better off than their existing one: santander.co.uk/personal/current- accounts/santander-edge-current- account.
The bank says that the online calculator also offers a quick process for moving accounts with a few clicks of a button.
Your account number, PIN and debit card will stay the same if you switch.
With the Edge account, you can use Santander cash machines free of charge overseas.
The bank’s mobile app offers money management tools which it says help customers keep on top of regular subscriptions they might otherwise lose track of.
In the coming months, Santander will also offer a budgeting tool that enables customers to set caps on areas of spend, such as on the food shop.
Santander has put a heavy focus on its app as part of a fightback against newer digital challenger banks, such as Chase, Monzo and Starling. Accounts can be opened in branch as well as online. You need to pay in a minimum of £500 every month and have at least two active direct debits on the account.
What about rival offers?
The new launch comes at a time when many banks are also offering generous savings rates linked to their current accounts — and switching incentives.
Barclays Rainy Day Saver pays 5.12 per cent on balances up to £5,000 and gives you easy access to your money.
Rising rates: The new Santander account comes at a time where many banks are also offering generous savings rates linked to their current accounts – and switching incentives
To qualify, you must be a member of Barclays Blue Rewards. It costs £5 a month and you must pay at least £800 into your current account each month.
On £5,000 savings, you’d earn £196 interest in a year once you deduct the monthly fee.
Virgin Money M Plus current account holders earn 2.02 per cent on balances up to £1,000 — or they can open an M Plus Saver account, which also pays 2.02 per cent on balances up to £25,000. There is no monthly fee, and you’ll see £101 interest in a year on £5,000.
Nationwide raised the rate on its Flex Instant Saver from 2 per cent to 2.25 per cent last Friday. This can be opened with its free FlexDirect account and will earn £112.50 interest a year on £5,000.
Last week, Halifax launched the Reward Bonus Saver paying 2 per cent, linked to its Ultimate Reward Current Account. This account is free if you pay in more than £1,500 per month, but costs £3 per month otherwise.
You must restrict your withdrawals to a maximum of four a year and the top rate is only paid for a year.
With £5,000 in the account you will earn £100 in the first year as long as you don’t have to pay the monthly fee.
HSBC has its Bonus Saver at 3 per cent on up to £10,000, although the rate drops to 0.5 per cent in any month you make a withdrawal. You’ll see £150 interest in a year on £5,000 if you don’t make a withdrawal.
You can open an account if you have a current account or savings account with the bank. If you open its easy-access Flexible Saver Account with £1, you qualify.
Both Nationwide and HSBC are also currently offering £200 cash if you switch your current account to them, meaning an additional boost of interest.
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