Martin Lewis issues ‘ditch and switch’ warning for customers of huge high street bank
MARTIN Lewis has issued a warning for customers of a major high street bank.
Santander has cut the rate on its easy-access savings account by 1.1%.
The account paid 5.2% interest when it first launched, but was cut to 4.20% in May and has now been reduced to 4%.
This means customers will get 4% interest on balances between £1 and £250,000.
It applies to customers who have a Santander’s Easy Access Saver Limited Edition (Issue 3).
The deal is no longer open to new customers.
When the deal first launched last September, it was one of the most competitive on the market.
However, experts from the Martin Lewis MoneySavingExpert blog are urging customers to think twice.
They said: “You can easily beat this new rate by switching elsewhere – which you’re allowed to do without penalty.
The blog stated that even though this account has a 12-month term the rate is variable.
This means that savers are not locked into this account and do not have to stick with it.
They explained: “This account works in a slightly unusual way – it initially had a 12-month term, but the rate wasn’t fixed for this period
“Instead, what happens at the end of the term – which has since been extended by 10 months – is that the account ‘matures’ and your money is transferred to one of Santander’s other easy-access accounts with a much lower interest rate.”
“You can ditch and switch,” they added.
The MoneySavingBlog named two saving accounts for customers which offer higher interest.
We’ve rounded up the info below.
Trading 212’s Cash ISA
This is a type of savings account which offers tax-free interest on savings up to £20,000.
There is no minimum you have to pay in to receive the interest.
You must be at least 18 years old to open this type of savings account.
Trading 212’s deal offers savers 5.1% AER Variable on customers savings.
An AER Variable rate means that your rate is not guaranteed and that it can change over time.
In this deal, savers can withdraw their cash at any time without any impact on their savings rate.
The interest is also paid daily.
If you want to read more about ISAs check out our article.
Oxbury savings account offer
This bank is offering an AER interest rate of 4.76%.
However, the interest will only be on balances above £25,000 and up to £500,000.
It is also worth noting that if your balance falls below £25,000 after opening the account, you will not receive interest on the balance.
You will only receive interest on balances above £500,000, where those balances have resulted from interest being accrued to the account.
Unlike Trading 212’s Cash ISA, where interest is paid daily, here it is only paid once a month.
What other options are available for savers?
There are several types of savings accounts available to customers, so you need to make sure you select one that suits your circumstances.
Easy-access accounts and regular savings accounts, allow greater flexibility when it comes to withdrawing your cash, but they tend to offer slightly lower interest rates.
If you’re happy to leave your cash in your account for longer then you can consider a fixed-bond or notice savings account.
Before opening a new savings account it’s always worth having a browse on price comparison websites.
Moneyfactscompare, Compare the Market, Go Compare and MoneySupermarket will help save you time and show you the best rates available.
These sites let you tailor your searches to an account type that suits you.
Where to find the best savings rates
Many savings accounts offer miserly rates meaning that money is generating little or no return.
However, there are ways to get your cash working hard. Sun Savers Editor Lana Clements explains how to make sure you money is getting the best interest rate.
Easy access savings accounts offer flexibility for customers, meaning they can dip in and out of cash when needed. However, the caveat is that rates can change at any time.
If you’re keeping your money in an easy access account, you’ll need to keep checking whether it’s the best paying account for your circumstances and move if not.
Check in at least once a month to see what is happening in the market.
Check what is offered by your bank – sometimes the best rates are for customers only.
But do search the wider market as often top savings accounts are offered by lesser known providers.
Comparison sites are a good place to check for the top rates. Try Moneyfactscompare.co.uk or Moneysupermarket.
You can search by different account type. You’ll usually get a better interest rate if you can lock your money away for a fixed amount of time, but it’s always a good idea to keep some money in an easy access account in case of emergencies.
Don’t overlook regular savings accounts often pay some of the best rates, but you’ll need to commit to monthly payments. This can be a great way to get into a savings habit while earning top rates at the same time.