The banking giant has launched a range of ISA deals, including an easy access eISA paying 3.20% and these fixed rate products:

• 1 Year Fixed Rate ISA – 4.15% AER/ tax-free (fixed)
• 18 Month Fixed Rate ISA – 4.25% AER/ tax-free (fixed)
• 2 Year Fixed Rate ISA – 4.20% AER/ tax-free (fixed)

However, new and existing customers transferring an ISA with at least £10,000 to one of its fixed rate deals can get a £50 cashback voucher which can be spent at a range of retailers including John Lewis, Sky, and Argos.

When the £50 is factored into the deal, the effective interest rate on the one-year fixed-rate ISA (4.15%) is turbo charged to an equivalent rate of 4.65%, assuming interest is paid away at the anniversary of the account, according to Savings Champion.

This is because £10,000 earning 4.15% would see savers earn £415 in interest. But with the £50 voucher, that totals £465, giving savers with £10,000 an equivalent rate of 4.65%.

How do the ISA rates from Santander compare?

The 4.15% rate on the Santander one-year fixed ISA is market-leading on its own, so once you factor in the bonus £50 cashback, it smashes all current cash ISA rates and even the market-leading fixed-rate savings account – a five-year fixed-rate bond paying 4.60% from Tandem bank.

Its two-year deal is also market-leading even before factoring in the bonus £50 cashback voucher, according to Savings Champion.

Savings Champion figures also show that if interest was paid away at the account anniversary, (simple interest not compounded), the equivalent interest rate would be around 4.58% for the 18-month ISA and 4.45% for the two-year ISA, although for these longer accounts the exact rate depends on how interest is paid.

There is also a ‘diluting effect’ for savers depositing more than £10,000 when it comes to interest rates.

The move from Santander comes as some of the biggest banks have been forced to defend their decisions not to increase savings rates but hike mortgage rates after Bank of England rate rises.

It was also suggested in last week’s Budget document that NS&I may increase the rate it pays to savers.

Santander’s £50 e voucher

Customers will receive the voucher code by email, which can be redeemed at one of the retailers, within 30 days of the ISA transfer being completed.

Andrea Melville, managing director for retail finance at Santander UK, said: “An ISA helps customers save for the future completely tax free and with the new tax year approaching, we have boosted our ISA rates to give our customers greater returns.

“On top of this, customers can benefit from our voucher offer to treat themselves this spring.”