‘Santander Edge’ is the bank’s latest proposition in the current account market, offering holders up to £20 in cashback on certain debit card spends and direct debits – for a £3 a month fee.

It also offers up to £13.10 in interest per month via a linked easy-access savings account – Santander Edge Saver.

All-in-all, it means customers can earn a maximum £240 in cashback and £157.20 in interest over the year. But once you factor in the £3 a month fee, it leaves customers with a potential to earn up to £361.20 in the first year.

To be eligible for the Santander Edge current account, customers need to have a minimum of £500 credited into the account every month and at least two active direct debits.

Santander said Edge has been “designed to support customers with their essential bills” and “with today’s economic and social context in mind”.

Santander Edge in detail

Santander claims it is the only current account on the market to offer cashback on both debit card spending and direct debits. Here’s what’s on offer:

• 1% cashback (capped at £10 a month) on transport and grocery debit card spends. This includes service stations and UK petrol stations as well as automated fuel dispensers, suburban and local commuter passenger transport including ferries, passenger rail and bus journeys as well as electric vehicle charging points. It excludes flights. See the Santander eligible debit card cashback list here. On the qualifying grocery spends, it includes supermarket, grocery, convenience stores, food markets as well as specialty food stores and vending machines. Aldi and Lidl are listed by Santander in this category.
• 1% cashback (capped at £10 a month) on household bills paid via direct debit. This includes council tax, gas and electricity, mobile, landline, broadband and paid-for TV packages. It excludes TV licences, LPG or Calor gas, as well as ‘maintenance contracts’, such as boiler repair cover. See the Santander eligible Direct Debit cashback list here.
• 4% AER / 3.93% gross (variable) interest on balances up to £4,000 via its linked Santander Edge Saver, which includes a 0.5% AER (variable) bonus rate for the first 12 months from opening. No interest is paid on balances above £4,000. In the first year, savers can earn up to £13.10 a month, but once the bonus drops off after a year, you can earn a maximum £11.48 a month. There’s no in-credit interest offered for the Edge current account.

The account also offers free use of Santander ATMs overseas, fee-free international and UK CHAPS transfers, access to its in-app budgeting tools and Santander Boosts – its retailer offers scheme which just launched last week.

How good is Santander Edge?

Anna Bowes, co-founder of Savings Champion, said this new offering “looks pretty generous” but added that it’s important to note that you’ll only earn 4% interest on up £4,000.

“If you use the current account shrewdly and therefore ensure you benefit from the £20 a month cashback, whilst maintaining exactly £4,000 in the linked account, your £361.20 (after the fee has been deducted) is the equivalent of around 9%. But you’ll have to work hard to keep everything as efficient as possible,” she said.

To get the maximum debit card and direct debit cashback, you would need to spend £2,000 a month on these essential bills and spends, and factor in the £500 a month which needs to be deposited into the account.

Santander confirmed that if you don’t pay in £500 or maintain two direct debits, you won’t be eligible for any cashback during that statement period, but will still pay the £3 monthly account fee.

Further, this is cashback on debit card spends, not credit card spending so the cash needs to be available in your account. Arranged overdrafts come with a 39.94% APR/EAR, while there are no fees or interest for unarranged borrowing, Santander confirmed. It added that if you’re switching to it from another bank, you won’t be charged arranged overdraft interest for the first four months.

While it may sound strange that you’re charged for an arranged overdraft but not for an unarranged overdraft, it’s to do with the regulator, the Financial Conduct Authority’s High Cost of Credit Review in 2020.

Santander said if customers accidently go over their balance and into an unarranged overdraft, it will make a decision on a case-by-case basis whether to allow that payment to go through or stop it.

If you want to compare it to the 1|2|3 Lite account, then with this existing but now off-sale account (you can continue to use it), there’s no in-credit interest, but it offers customers up to £15 a month in cashback for a £2 a month fee. This is split between:

• 1% cashback (up to a max of £5 a month) on council tax, mobile and home phone bills, broadband and paid-for TV packages and Santander monthly mortgage payments
• 2% cashback (up to a max of £5 a month) on gas and electricity bills, Santander Home Insurance premiums
  (policies administered and underwritten by Aviva Insurance Limited) and Santander life protection premiums (policies administered and underwritten by Aviva Life and Pensions UK Limited)
• 3% cashback (up to a max of £5 a month) on water bills.

Should you switch from Santander 1|2|3 Lite?

This current account has been removed from sale for new customers. Santander confirmed there is no impact to existing customers with this product. It added that existing 1|2|3 Lite customers can continue to use their account as usual.

Further, it said there are no impacts to the 1|2|3 Current Account or any other Santander current account as part of the Edge account launch today.

For any 1|2|3 Lite customer considering switching to Edge, Santander said there will be a pre-populated form in online banking, with the account number, sort code and debit card staying the same. Santander said in this instance, you won’t be credit checked, but you will need to meet the eligibility requirements, so £500 per month and two Direct Debits.

It’s best to use the Santander calculator to work out what your potential earnings could be.

What else you need to know

Customers can hold a maximum of two accounts, one in their own name and one in joint names. It can be opened online and in branch, while you can manage it through online banking, mobile app, in branch and through telephone banking.

It can be opened directly or via CASS (Current Account Switch Service) to move a non-Santander account to the bank. You can have both a Lite and an Edge account if you so wish.

There’s a maximum £300 ATM withdrawal limit for the Santander Edge, though if you need to access more cash, you’ll need to pop into a branch.

Eligible cashback spends apply to both in-store and online spends, Santander confirmed.

Enrique Alvarez, chief customer officer at Santander UK, said: “We’re excited to be able to unveil Santander Edge, designed around what we know our customers want from their bank. We’ve created a new account to help customers make the most of their money today and save for a better tomorrow.”