The banking giant has increased the in-credit interest rate on the 1I2I3, Select and Private current accounts from 1% AER/gross (variable) to 1.5% on balances up to £20,000 as of today.

This means customers can earn up to £298 in interest per year as well as cashback on household bills for a £4 a month fee.

It comes as Santander has doubled the cashback on gas and electricity bills to 4% for two months from September.

There is no change for the Lite current account.

Customers can continue to earn cashback on selected household bills paid by direct debit, capped at £5 (£10 for gas and electricity bills) in each of the following categories:

1% cashback:

Council tax bills
Mobile and home phone bills, broadband and paid-for TV packages
Santander monthly mortgage payments

2% cashback (4% for two months from September):

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)

3% cashback:

Water bills.

Fixed rate ISA increases

Santander has also increased its fixed rate ISA products, with customers transferring an existing ISA of at least £10,000 from another provider eligible for a £50 retail voucher which can be redeemed at over 100 retailers.

Here’s what’s now on offer:

• 1 Year Fixed Rate ISA – 3.35% AER/ tax-free (fixed) from 3%
• 18 Month Fixed Rate ISA – 3.45% AER/ tax-free (fixed) from 3.1%
• 2 Year Fixed Rate ISA – 3.6% AER/ tax-free (fixed) from 3.25%.

Hetal Parmar, head of banking and savings at Santander UK, said: “We understand saving for the future is important for many people and our increased rates on cash ISAs and the 1I2I3 Current Account will boost returns on customers’ money, helping with their savings goals.  For over a decade, our popular 1I2I3 account has provided ongoing value and now customers can earn up to £298 in interest per year, plus cashback on household bills.”