The banking giant confirmed the in-credit interest rate on its 1|2|3, Select and Private Current Account will rise from 0.50% AER/gross (variable) to 0.75% AER/gross (variable) on balances up to £20,000.

The new rate of interest will be applied to accounts from Monday 20 June 2022.

This means customers will be able to earn up to £150 in interest on their account each year, up from the current £100.

Hetal Parmar, head of banking and savings at Santander UK, said: “We’re pleased to be able to increase the interest rate on our popular 1|2|3 Current Account. Customers can continue to earn cashback on regular household bills plus cashback on card spending at a range of retailers through our Retailer Offers programme, and now, increased interest on their balance.”

It confirms there are no other changes to the account, and the £4 per month fee remains.

Customers can continue to earn cashback on selected household bills paid by direct debit, capped at £5 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:

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.

There are no changes to the Santander 1|2|3 Lite current account where customers earn cashback on household bills only (no in-credit interest) for a £2 a month fee, or the Everyday Account which is a standard current account without a monthly fee.

However, following yesterday’s Bank of England decision to raise the base rate from 1% to 1.25%, Santander savings products that are linked to the base rate will increase by 0.25% from Monday 4 July. This includes the Rate for Life and Good for Life savings accounts.