Santander increases interest rate on 1|2|3 current accounts
Santander has increased the in-credit interest rate on 1|2|3 current accounts from 1.5% AER to 2% AER.
The 2% AER/1.98% gross (variable) rate applies to the 1|2|3, Select and Private Current Accounts on balances up to £20,000.
It will be applied automatically and means customers can earn up to £396.38 in interest each year, as well as cashback on household bills for a £4 a month fee.
Based on the in-credit interest rate only, Santander’s increase puts it in third place in the best buy tables. It comes behind Virgin Money’s M Plus Account (2.02% AER) and the Nationwide FlexDirect Account (5% AER), according to Savings Champion data.
However, Virgin Money applies the rate on a balance up to £1,000, while Nationwide applies to balances of up to £1,500, and reverts to 0.25% AER after the first 12 months.
Santander household bill cashback
The cashback on selected household bills applies to those paid by direct debit, and it is capped at £5 in each of the following categories:
Council tax bills
Mobile and home phone bills, broadband and paid-for TV packages
Santander monthly mortgage payments.
Gas and electricity bills
Santander Home Insurance premiums (policies administered and underwritten by Aviva Insurance Limited)
Santander Life Insurance premiums (policies administered and underwritten by Aviva Life & Pensions UK Limited).
£200 bonus to switch to Santander
The interest rate increase comes as Santander launched a £200 current account switch offer last month to customers moving their everyday banking to the high street giant.
New and existing customers switching to the Santander Edge, 1|2|3, Select, Private or Everyday current account can net £200 when meeting the following eligibility criteria within 60 days:
- Switch your account via CASS (Current Account Switch Service which transfers your existing balance, all direct debits, standing orders within seven days)
- Set up and maintain two active direct debits
- Deposit at least £1,000
- Log in to online or mobile banking.
In November, Santander also launched an alternative current account offering with Edge as it took the axe to the 1|2|3 Lite account for new customers.
It also launched Santander Boosts – a ‘personalised’ retail scheme offering cashback, vouchers and discounts to card holders as it closed its previous Retailer Offers scheme.