The bank has confirmed the introduction of a new wave of ISAs onto the market which offer a favourable return for savers. This includes an eISA which pays an interest rate of 1.85 percent and a Cash ISA with a 3.10 percent rate. On top of this, Santander is offering customers a £50 voucher for ISA transfers as part of this announcement.
This comes amid the ongoing cost of living crisis in the UK which has seen rising inflation diminish returns on savings.
Hetal Parmar, the head of Banking and Savings at Santander UK, explained why the bank is opting 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 customers a boosted return – all tax-free.
“The voucher offer is an added extra, putting more money in our customers’ pockets this autumn, and our ISA transfer team is in place to help customers benefit from these limited time offers.”
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After today’s rate hike, Santander’s eISA now pays 1.85 percent AER / tax-free and allows customers to access their money with ease.
The bank has also raised the interest rates of the following savings accounts:
One Year Fixed Rate ISA – Three percent AER/ tax-free (fixed)
18 Month Fixed Rate ISA – 3.10 percent AER/ tax-free (fixed)
Two Year Fixed Rate ISA – 3.25 percent AER/ tax-free (fixed)
All customers, both new and existing, who move from an ISA of at least £10,000 from another bank into a Santander Fixed Rate ISA will get a £50 cashback as a retail voucher.
This incentive for customers can be used at over 100 retailers, as well as restaurants and subscription services.
Every Santander customer will get their voucher code automatically by email within 30 days of the completed account transfer.
It should be noted that these raised interest rates and voucher offering are only available for a limited period of time.
As part of its announcement, Santander warned that this deal may be “withdrawn without notice”.
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Currently, inflation in the UK is at 9.9 percent which has given many savers cause for concern as they may not get the returns they were expecting.
While this is a slight fall from the month before, financial experts are concerned a high inflation rate could disincentivize Britons from saving in the future.
On this issue, interactive investor’s senior personal finance analyst Myron Jobson said: “It is important to remember that the headline inflation figure can dramatically differ from your own personal inflation number.
“Any savings you can make now will help you build up reserves for winter when you’ll really need it most. But that’s easier said than done in a cost-of-living crisis.”
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To mitigate the damage of inflation on people’s savings, the Bank of England has been raising the country’s base rate.
As it stands, the UK’s base rate is 1.75 percent and analysts are predicting it will be raised even further this week when the financial incision’s Monetary Policy Committee (MPC) meets later this week.
Experts believe the Bank of England will raise interest rates by another 50 basis points with the hope that banks such as Santander will pass on this rate hike to their customers.
The Bank of England’s MPC is due to meet on Thursday, September 22, 2022 to announce any potential further rate rises.