The bank confirmed the introduction on the market of a new wave of ISAs offering favorable returns to savers. This includes an eISA which pays an interest rate of 1.85% and a Cash ISA with a rate of 3.10%. On top of that, Santander is offering customers a £50 voucher for ISA transfers as part of this announcement.
It comes amid the current UK cost of living crisis, which has seen rising inflation diminish returns on savings.
Hetal Parmar, head of banking and savings at Santander UK, explained why the bank is choosing to raise rates at this particular time.
Mr Parmar said: “Saving for the future is important to many and our increased Cash ISA rates will give clients increased returns, all tax free.
“The voucher offer is an added extra, putting more money in our customers’ pockets this fall, and our ISA transfer team is in place to help customers take advantage of these limited-time offers.”
READ MORE: Completely free way to save £195 a year on your energy bills – a nifty money-saving hack
After today’s rate hike, Santander’s eISA now pays 1.85% AER / excluding tax and gives customers easy access to their money.
The bank also raised interest rates for the following savings accounts:
One Year Fixed Rate ISA – Three Percent AER/Exclusive of Tax (Fixed)
18 Month Fixed Rate ISA – 3.10% AER/Excl. Tax (Fixed)
Two-year fixed rate ISA – 3.25% AER / excl. tax (fixed)
All new and existing customers who switch from an ISA of at least £10,000 from another bank to a fixed rate ISA from Santander will receive a £50 refund in the form of a retail voucher.
DO NOT MISS
This customer incentive can be used at over 100 retailers, as well as restaurants and subscription services.
Each Santander customer will receive their promotional code automatically by email within 30 days of the completed account transfer.
It should be noted that these high interest rates and voucher offers are only available for a limited period.
As part of its announcement, Santander warned that this agreement could be “withdrawn without notice”.
READ MORE: Britons in the upper bracket can do 2 main things to reduce tax payments
Currently, inflation in the UK is at 9.9%, which has caused concern among many savers that they may not get the returns they expected.
Although this is a slight drop from the previous month, financial experts fear that a high rate of inflation could deter Britons from saving in the future.
Commenting on this, Myron Jobson, Senior Personal Finance Analyst at Interactive Investor, said: “It is important to remember that the headline inflation figure can differ significantly from your own personal inflation figure.
“Any savings you can make now will help you build up reserves for the winter when you really need it most. But that’s easier said than done in a cost of living crisis.
To mitigate the damage of inflation on people’s savings, the Bank of England raised the country’s key rate.
As it stands, the UK base rate is at 1.75% and analysts expect it to be raised further this week when the Financial Incision Monetary Policy Committee (MPC) meets later this week.
Experts believe the Bank of England will raise interest rates another 50 basis points in the hope that banks such as Santander will pass the rate hike on to their customers.
The Bank of England’s MPC is due to meet on Thursday, September 22, 2022 to announce any further potential rate hikes.