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Santander has launched a new current account with a linked, easy-to-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 for debit card spending in supermarkets and transport.
It offers a further 1pc cashback, capped at £10 per month, for household bills. This includes council tax, energy, mobile, fixed, broadband and paid TV packages.
Santander’s Edge account offers an easily accessible 4% rate on balances up to £4,000 and 1% cashback capped at £10 per month on supermarket and transport expenses
The account costs £3 per month and launches alongside Santander’s already popular 123 and 123 Lite accounts.
Customers are told they can keep one of the existing current accounts if they wish, but the 123 Lite account (which costs £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 has the maximum £4,000 in the linked savings account will earn £124 in interest after fees are taken into account.
By comparison, the main 123 checking account has a £4 monthly fee and pays 1.75 per cent interest on balances up to £20,000.
That means you need almost £10,000 in your account to earn £124 after fees.
So for those with smaller balances, the Edge account might be a better option. The Lite account has no linked savings interest.
To get the full £20 cashback available on the Edge account every month, you’ll need to spend £1,000 a month on household bills and a further £1,000 on supermarket shopping and transport costs.
Santander customers can use the online calculator to find out if their new account is better off than their existing one: santander.co.uk/personal/payment accounts/santander-edge-payment account.
The bank says the online calculator also provides a quick process for moving bills with a few clicks of a button.
Your account number, pin code and debit card will remain the same if you switch.
The Edge account allows you to use Santander ATMs abroad for free.
The bank’s mobile app offers money management tools that help customers keep track of regular subscriptions they would otherwise lose track of.
In the coming months, Santander will also offer a budgeting tool that will allow customers to set limits for spending areas, such as for the grocery store.
Santander has put a lot of focus on its app as part of a battle against newer digital challenger banks, such as Chase, Monzo, and Starling. Accounts can be opened both in branches and online. You must pay a minimum of £500 each month and have at least two active direct debits on the account.
What about competitive offers?
The new launch comes at a time when many banks are also offering generous savings rates tied to their current account 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 when many banks are also offering generous savings rates linked to their current accounts – and switching incentives
To be eligible, you must be a member of Barclays Blue Rewards. It costs £5 per month and requires you to deposit a minimum of £800 into your checking account each month.
On £5,000 in savings, you would earn £196 in interest in a year once you deduct the monthly costs.
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 are no monthly fees and you see £101 interest in a year on £5,000.
Nationwide raised the rate on its Flex Instant Saver from 2 percent to 2.25 percent last Friday. This can be opened with his free FlexDirect account and earns £112.50 interest per annum on £5,000.
Last week, Halifax launched the Reward Bonus Saver that pays 2 percent linked to its Ultimate Reward Current Account. This account is free if you pay more than £1,500 per month, but costs £3 per month otherwise.
You must limit your withdrawals to a maximum of four per year and the top rate is only paid for one year.
With £5,000 in the account, you’ll earn £100 in the first year, as long as you don’t have to pay monthly fees.
HSBC has a 3 per cent Bonus Saver on up to £10,000, although the rate drops to 0.5 per cent each month you withdraw. 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 or savings account with the bank. If you open the easily accessible Flexible Saver Account with £1 you are eligible.
Both Nationwide and HSBC are also currently offering £200 cash if you switch your current account to them, meaning an additional rate hike.
sy.morris@dailymail.co.uk
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