Santander has launched a 'top of the market' Regular Saver account offering an 8% AER interest rate, including a 5% bonus for the first 12 months. The account allows customers to deposit up to £200 per month, and based on Santander's calculations, savers depositing the maximum could build a pot worth £2,504 after one year, £5,018 after two years, and £7,607 after three years. These figures assume the account is opened on the first day of the month with an initial £200 deposit on the second day, followed by £200 on the second of each subsequent month, no withdrawals, and no rate changes.
Details of the Santander Regular Saver
The account is exclusively available to Santander current account customers, including those with Everyday, Edge, Edge Student, Edge Up, and Explorer accounts. New customers can also benefit from a £180 switching offer when they switch to a Santander current account using the Current Account Switch Service (CASS) and meet qualifying criteria. The account requires a minimum balance of £1, is limited to one per customer, and is open to UK residents aged 16 and over.
João Soares, head of savings at Santander UK, said: “We know customers want savings accounts that are easy to understand, offer a competitive rate and deliver value. That’s why our new Regular Saver rewards customers with a market-leading rate, while supporting customers who want to build up a habit of saving regularly.”
Interest rates and flexibility
After the initial 12-month bonus period, the interest rate reduces to 3.00% AER/gross. Unlike many regular savings accounts, Santander allows penalty-free withdrawals at any time, and customers can close the account after the 14-day cancellation period without charge. This flexibility is a key differentiator, as many regular savers impose restrictions on withdrawals.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Santander has shot to the top of the market with its new Regular Saver paying 8% AER, incredibly eye-catching for those looking to gradually build their savings pot. The 8% AER does include a 5% bonus for 12 months.” She noted that after the bonus period, the account continues to pay 3% AER, which is higher than many competitors that revert to a much lower flexible saver rate.
Comparison with other market offers
Santander's 8% rate tops the market, but other banks offer competitive alternatives. Zopa offers a 7.1% AER over six months with a £300 monthly limit, allowing savers to deposit up to £1,800 total. Interest is paid at term end, with an estimated £80 earned on full deposits. Withdrawals are allowed without penalty, but withdrawals can only be replaced within the monthly allowance.
First Direct offers a 7% AER over 12 months, with a £300 monthly limit, totalling £3,600 in deposits. At term end, savers receive £3,736.50, including £136.50 in interest. However, withdrawals are not permitted until the term ends.
The Co-operative Bank's Regular Saver (Issue 1) pays 7% AER for 12 months, with a £250 monthly limit, allowing total deposits of £3,000 and potential interest of £114.21. This account also allows penalty-free withdrawals.
Expert advice on regular savings
Rachel Springall added: “It is never too late for consumers to start putting some cash aside for any future goals, as those who save little and often can feel more in charge of their financial wellbeing. Regular savings accounts are ideal for slowly building a pot as they encourage the savings habit. However, consumers will need to work out if they are the right choice for them, as some accounts can be restrictive and might not be suitable for larger deposits.”
