You are here: Home - Saving-Banking - News -

Trick to beat market best: Get 4.2% on Santander’s one-year fixed rate ISA

Written by:
Santander has increased the rates offered on a range of fixed rate cash ISAs, with the one-year deal paying 3.7%. But there is a way to boost it to 4.2% – here’s how.

Santander has climbed to the top of the best buy tables, with its one-year fixed rate cash ISA paying 3.7% and its two-year deal paying a market-leading rate of 4.2%.

But there is a way for some customers to get the same rate as the two-year deal by only locking up their money for a year.

This is because Santander’s running a £50 retail cashback voucher offer for customers transferring ISAs of at least £10,000 from another provider into any of its fixed rate ISAs, including:

  • 1 Year Fixed Rate ISA – 3.7% AER/ tax-free (fixed)
  • 18 Month Fixed Rate ISA – 4% AER/ tax-free (fixed)
  • 2 Year Fixed Rate ISA – 4.2% AER/ tax-free (fixed).

When factoring in this £50 voucher with the 3.7% offered on its one-year cash ISA, customers transferring the minimum £10,000 from another provider to Santander can earn the equivalent rate of 4.2%.

Savings Champion calculations showed that £10,000 earning 3.7% would see savers earn £370 in interest. But with the voucher, that equals £420 all in, giving an equivalent rate of 4.2% – the same interest level for customers tying up their cash for two years.

However, if you were to deposit £20,000, there is a “diluting effect” as savers would receive £790 which is the equivalent of 3.95%.

According to HMRC figures, the average ISA pot in the UK is £21,996, meaning transferring a two-year fixed rate ISA product would see annual returns of £923.83, plus the £50 voucher.

Santander’s £50 cashback voucher

Eligible customers transferring the minimum £10,000 into one of Santander’s fixed rate cash ISAs will receive the voucher code automatically by email within 30 days of the completed transfer.

It can be spent online or in-store (varies depending on the retailer) at over 100 retailers, including restaurants, supermarkets, clothes stores and subscription services. Names include Amazon, Currys PC World, Just Eat and Primark, to name a few. See the full list of retailers here. The expiry date will vary on the retailer.

The terms and conditions state that the £50 voucher is subject to availability and may be withdrawn at any time so you may need to move quickly, if it’s right for you and your circumstances.

Ordinarily, savers need a minimum £500 to open one of its fixed rate ISAs. With these accounts, you can only access your cash if you close them. However, this is subject to 120 days’ loss of interest.

Santander has also increased the rate on its easy access eISA from 1.85% to 2% (variable), while its eSaver pays 2.75% AER/gross (variable) for 12 months. It’s available until 1 November 2022.

Hetal Parmar, head of banking and savings at Santander UK, said: “We are delighted to boost returns on savings with best buy rates across a range of accounts that fit with different savings goals. Savers can choose the flexibility of easy access savings as well as guaranteed rates on tax-free ISAs, all with the peace of mind that their money is earning a great return.”


There are 0 Comment(s)

If you wish to comment without signing in, click your cursor in the top box and tick the 'Sign in as a guest' box at the bottom.

Your right to a refund if travel is affected by train strikes

There have been a wave of train strikes in the past six months, and for anyone travelling today Friday 3 Febru...

Could you save money with a social broadband tariff?

Two-thirds of low-income households are unaware they could be saving on broadband, according to Uswitch.

How to help others and donate to food banks this winter

This winter is expected to be the most challenging yet for the food bank network as soaring costs push more pe...

What will happen if rates change

How your finances will be impacted by a rise in interest rates.

Regular Savings Calculator

Small regular contributions can build up nicely over time.

Online Savings Calculator

Work out how your online savings can build over time.

DIY investors: 10 common mistakes to avoid

For those without the help and experience of an adviser, here are 10 common DIY investor mistakes to avoid.

Mortgage down-valuations: Tips to avoid pulling out of a house sale

Down-valuations are on the rise. So, what does it mean for home buyers, and what can you do?

Five tips for surviving a bear market mauling

The S&P 500 has slipped into bear market territory and for UK investors, the FTSE 250 is also on the edge. Her...

Money Tips of the Week