22 September 2023 , 14:06
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Santander has issued an important message and is offering £50 for customers willing to switch to the high street bank. Santander has announced it is hiking up rates on fixed-rate cash ISAs - and rewarding those who decide to switch to an account with the bank.
It confirmed yesterday that the one-year fixed rate ISA will now pay customers a rate of 5.60 per cent AER/tax-free. As well as this, the high street bank's two-year fixed rate ISA is paying savers 5.45 per cent AER/tax-free. Cash ISAs are a great way to keep savings and avoid being taxed. It follows on from a series of interest rate boosts the bank has made over the past year to better support savers.
Central banks have raised their interest rates over the past year to help try and combat the impacts of inflation. However, savers have still been strapped with record-high inflation rates - with declining returns. Santander is offering customers a £50 e-voucher to switch their ISA from another provider to Santander, with a least £10,000 in value, and it can be done online or in a local branch.
Hetal Parmar, Head of Banking and Savings at Santander UK said: "Saving for the future is important to many and our increased Cash ISA rates will give customers a boosted return – all tax-free. The voucher offer is an added extra, putting more money in our customers' pockets this autumn, and our ISA transfer team is in place to help customers benefit from these limited-time offers."
Although it can be argued cash ISAs aren't the best way for savers to get the most from their money with these hiked rates, outlined by Andy Mielczarek, the founder and CEO of SmartSave, as he explained: "With inflation remaining stubbornly high, the money most people have in savings is losing value in real terms.
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"Even though interest rates have risen notably since the end of 2021, and may again tomorrow, millions are not seeing any significant benefits from this. This is because too many banks are still failing to pass better rates onto customers, particularly where easy access and current accounts are concerned."
Sarah Coles at Hargreaves Lansdown, highlighted that there is a "lower interest rate on cash ISAs" compared to equivalent savings accounts, but it's not all negative as she added: "It's not dramatically lower, so for an awful lot of people it will be a price worth paying. You also need to consider what else you may need the allowance for. For example, if you wanted to invest significant sums and take advantage of a LISA, you would need to weigh up the best possible use of this year's ISA allowance."