Santander launched a wave of better shopping savings rates, including a top easy-access account paying 2.75%.
A selection of best-paying fixed-rate offers has also been launched by Cahoot, an internet-only subsidiary of Santander.
The rate hikes mark a change in approach by a major bank. Over the past year, the big banks have had no desire to fight for savers’ money or to play fair on rates.
So far, the majority of best buys have been driven either by smaller construction companies or challenger banks and, given the size of Santander, this is likely to stimulate rate competition in the next days.
>> Check the best buys savings rates in our independent best buys charts
To the top: Santander’s rate hikes set it apart from many other major banks that have refrained from passing on successive base rate hikes to customers
Santander’s easy-to-access offer pays a market exceeding 2.75% on pots up to £250,000.
The online offer gives savers instant, penalty-free access to their money and can be opened for just £1.
Santander says the deal is available until November 1 but warns it could end earlier.
Someone with a £10,000 deposit in this account would earn £275 in interest after one year.
Anna Bowes, co-founder of Savings Champion, said: “It’s been really interesting to see some of the big banks and building societies returning to the best buy charts.
“Santander has done well in the fixed rate Isa tables before, but this new easy-to-access account paying 2.75% is head and shoulders above the next best – and you don’t need to be an existing or current customer to be eligible. Additionally, the maximum balance is £250,000.
“Barclays has a Rainy Day Saver account paying 5.12%. This is an easy access account paying 5.12% up to £5,000 and 0.15% thereafter.
“But you must be a Barclays Blue Reward customer and therefore have a checking account with them.”
The Easy Access Agreement is 0.25 percentage points more than the Yorkshire Building Society’s Limited Access Account which pays 2.5%. However, the Yorkshire rate only applies to balances up to £5,000.
Therefore, for many savers, the next best offer in the market is Al-Rayan Bank, which pays 2.35%, or 0.4 percentage points less than Santander.
For those looking for fixed rate savings deals, Cahoot, part of the Santander banking network, also offers a range of new best buys.
Cahoot’s one-year repair contract pays 4.3%, its two-year plan pays 4.7% and its three-year contract offers 4.8% – the highest overall rate available.
Savers who hide £20,000 in Cahoot’s one-year solution will earn £860 in interest.
Those who opt for the three-year solution will earn £3,020 in interest over the three-year period.
Savers looking to hide £85,000 or more in one of these accounts should beware of overstepping their FSCS protection.
Cahoot, which shares a banking license with Santander, is backed by the UK Deposit Guarantee Scheme. This means that savers’ deposits will be protected up to £85,000 per person or, in the case of a joint account, up to £170,000.
However, due to the shared banking license, the FSCS limit will apply to all savings held with both Santander and Cahoot. Therefore, an individual saver would be wise to avoid splitting more than £85,000 between the two providers.
What about Isa rates in cash?
For savers looking to protect the interest they earn from the taxman, Santander has also launched a series of cash Isa offers.
The bank’s Isa offers some of the best rates in the market, including a one-year, 18-month and two-year contract.
Its one-year fixed rate pays 3.7%, its 18-month fixed rate pays 4% and its two-year fixed rate yields 4.2%.
Although its one-year and two-year fixed rate agreements are matched by Shawbrook Bank and Gatehouse Bank respectively, those who transfer an Isa into one of Santander’s fixed rate Isas can also obtain a sales voucher Retail £50.
Savers who prefer easy access to their savings can earn 2% through its eIsa agreement.
Hetal Parmar, Head of Banking and Savings at Santander UK, said: “We are delighted to increase savings returns with the best purchase rates on a range of accounts that suit different business goals. ‘saving.
“Savers can choose the flexibility of easy access to savings plus guaranteed rates on tax-free Isas, all with the peace of mind that their money is earning a great return.”
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