Santander has introduced a new regular savings account offering an 8% interest rate. This type of account allows individuals to set aside a specific amount of money each month in return for a higher interest rate.
The new Santander account provides an 8% rate, inclusive of a 5% bonus for the initial 12 months. Subsequently, the rate decreases to 3%. These rates are subject to change as they are variable.
Customers of Santander can save up to £200 per month with this regular saver, potentially accumulating £2,504 with interest after one year and £5,018 by the end of the second year. Withdrawals are permitted without penalties, but funds must be transferred to a Santander current account.
The Regular Saver account is exclusively accessible to all Santander current account holders. João Soares, Head of Savings at Santander UK, emphasized the simplicity, competitive rate, and value offered by the new Regular Saver account, catering to customers aiming to develop a consistent savings habit.
Apart from Santander, other banks also provide regular saver options. Zopa offers a 7.1% variable rate for six months on savings up to £300 monthly. First Direct has a fixed 7% rate for one year, allowing deposits of up to £300 per month, while Co-op Bank offers a 7% rate with a slightly lower monthly savings limit of £250.
For those seeking easy-access savings accounts, the current highest rate available is 5%. Revolut offers 5% to new customers for six months, comprising a 2.9% variable rate and a 2.1% bonus rate for the same period. Cahoot provides a 5% rate on savings up to £3,000. StreamBank offers the top one-year fixed rate at 4.81%, and Afin offers a 4.9% rate for a five-year fixed term.
Tax implications on savings interest vary based on the taxpayer’s bracket. Basic-rate taxpayers can earn up to £1,000 in savings interest annually before incurring tax. The Personal Savings Allowance for higher-rate taxpayers is £500 per tax year, while additional rate taxpayers do not receive any allowance. Individuals earning below £12,570 have a starting rate for savings of £5,000, which decreases as earnings surpass the personal allowance threshold.
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