The banking giant confirmed that from today, the interest rate on the Santander Edge Saver will rise to 7% AER (6.78% gross variable) on balances up to £4,000.

This is split between an underlying rate of 4.5% AER (4.41% gross variable) and a bonus rate of 2.5% AER (2.47% gross variable) for the first 12 months of the account being opened.

Santander said for existing customers who opened the Edge Saver when it was paying 4% AER (3.93% gross variable), the higher rate will be applied automatically so they don’t need to do anything to get it.

Based on a £4,000 deposit in the account, savers will typically earn £22.60 in interest every month. You can deposit and withdraw funds without any fees or restrictions. Balances above £4,000 do not earn any interest.

For new customers considering this easy access account, you first need to open its current account online or in branch as the Edge Saver is a linked product.

The Santander Edge current account costs £3 a month but allows customers to earn up to £20 a month in cashback on essential spending and household bills, as well as offering fee-free international and UK CHAPS transfers.

Further, customers need to have a minimum £500 credited into the account each month and at least two active direct debits need to be set up.

Andrea Melville, director of current accounts, savings and business banking at Santander, said: “Whether saving for something specific like a holiday or simply putting funds aside for a rainy day, the Edge Saver allows our customers to benefit from the convenience of an easy access account, combined with a fantastic interest rate. We know that in the current economic climate every penny counts and we are pleased to be able to offer our customers both cashback and interest benefits on our Edge account.”

There’s no change in rates on the Santander Edge Up current account which offers customers a chance to earn up to £100 a month in cashback and interest for a £5 a month fee as long as customers hit spending thresholds.

How good is the 7% easy access offering?

Based solely on the top-paying easy access accounts currently on the market, digital challenger Tandem offers 5% AER (4.89% gross). This includes an underlying rate of 4.65% and a top up rate of 0.35%. With this account, there’s no requirement to open a current account – it doesn’t offer this anyway.

NatWest and RBS offer a Digital Regular Saver to their respective current account customers where they pay 6.17% AER (6% gross variable) on balances up to £5,000. Balances above £5,000 earn 1.41% AER. However, between £1 and £150 needs to be deposited each month but its double-ups feature allows savers to stash more cash in and earn this interest rate. Savers can also access their cash at anytime.

Meanwhile, the First Direct Regular Saver pays 7% AER/gross to customers with a First Direct 1st Account (customers can bag £175 for the current account switch too). But unlike Santander which doesn’t have any restrictions or penalties on withdrawals or deposits, the First Direct linked account allows customers to save between £25 and £300 a month and you have to keep the money in the account for a year without withdrawals. Based on £300 a month being saved, this would mean £136.50 in interest (gross) over the year.

Elsewhere, HSBC’s Online Bonus Saver pays 4% AER on up to £50,000 for current account holders. Where a withdrawal has been made or the account is closed, the interest rate will tumble to the standard rate of 1.75% AER for that month. The bonus is paid in any month where you don’t make a withdrawal or don’t close your account.

All-in-all, it’s important for customers to really compare all the offerings, fees and charges when switching bank accounts and not just chase a high rate on a linked savings account. Also factor in that some rates come with an underlying and a bonus rate paid for a period of time. Therefore, diarise to check the rates available when it’s close to expiring.

If you are looking to earn a decent rate on your cash, you could consider a one-year fixed rate bond if you don’t need access to your cash. The top-payer right now is OakNorth Bank paying 6.02% AER/gross, according to Savings Champion data.

Related: How to get 7.5% interest without tying up your savings for years