Santander has increased the in-credit interest rate on its 123 current accounts from 1.75% to 2%.
This is the sixth time since the beginning of last year that Santander has increased the rate, and it will automatically apply to customer accounts from 7 February 2023.
Higher Interest for Santander Customers
Customers with balances up to £20,000 will see the increased rate of 2% apply to their accounts.
This means that someone holding the maximum £20,000 in their 123 current account will earn up to £396.38 in interest each year.
The rate hike will be welcomed by Santander customers, especially since rates fell to as low as 0.3% in April 2021.
Santander Compared to Other Banks
However, when compared to other in-credit interest rates currently being offered by other banks, Santander is one of the better options.
Many banks, including TSB, First Direct, Halifax, HSBC, Barclays, NatWest, Starling, and Monzo, don’t offer in-credit interest.
Those looking for a current account with a higher interest rate can still find better options, such as Kroo which offers 3.03% on balances up to £85,000.
Nationwide also offers 5% interest to new joiners in their first year on balances up to £1,500.
Bank Account Deals to Consider
In addition to the interest rate, savers should also consider any exclusive savings deals that are linked to each bank account.
For example, JP Morgan-backed Chase is increasing the rate on its linked savings account to 3% on Monday. Savers will be able to deposit up to £500,000 into the account with no fees from Chase for accessing their money.
Savings Guru Opinion
A spokesperson for the Savings Guru commented on the increase, saying, “Santander’s account is looking pretty unattractive by comparison to other options in the market, such as Kroo paying 3.03% on their current account and Chase moving to 3% on Monday with their linked savings account.”
However, they also added, “Santander has been a lot fairer than their high street rivals who are still paying interest rates of around 0.5% to savers despite base going up by 3.9% in that time.”
In conclusion, Santander’s increased in-credit interest rate on its 123 current account will benefit its customers, but savers should also consider other options in the market that offer higher interest rates and exclusive savings deals.
