Money Insider: Santander – up front with savings interest


It's been a hive of activity in the savings market over the last couple of weeks, with some cracking new fixed rates being launched as well as an eye-catching new promotion from the Spanish banking giant Santander.

As part of its continued aggressive drive to win more personal bank accounts, Santander has come up with a new product which will pay three years' worth of savings interest up front for customers with or who open a Santander current account.

As well as the requirement to hold a current account with the bank, you'll also need a minimum savings balance of £10,000 to be eligible to open one of the new Upfront Savings Bonds.

The option to be able to earn three years' worth of interest in advance, even though the rate is less than market leading, will no doubt appeal to some savers, particularly those who rely on their interest income to help with day-to-day living costs.

You can currently get better fixed rates of 4.30% gross with Yorkshire Bank and 4.15% gross with AA Savings where a £12,000 balance would net you £1,238 and £1,195 respectively after three years, compared with the £1,000 net which you'd receive under the Santander deal.

The concept is unique in the UK savings market and even though the rate being offered is not a best buy, I'm sure some people will be content to accept a lower return as a trade-off for 3 years' worth of interest up front.

As well as a means of increasing its share of the current account market, the maximum savings limit of £2m could bring in a significant amount of new credit balances for Santander too.

It's an interesting move in what has become a lacklustre and sterile savings market. Time will tell if it's enough of a carrot to convince many people to switch their bank account.

It's refreshing to see this sort of innovation, giving savings customers more options in this low interest rate environment, and comes a little after a month after high-street rival Halifax launched its monthly Savers Prize Draw. Maybe it will inspire other providers to respond with their own fresh ideas.

Coventry launches Poppy Bond

The latest edition of the popular Poppy Bond from Coventry Building Society is now on sale, paying 3.55% gross/AER fixed until 30 April 2013.

The bond can be opened in branch, online or by phone, and has a minimum balance requirement of just £1. There is a monthly interest option of the account available, but as with the majority of fixed rate accounts, be aware that there is no access to your capital until the bond matures.

The rate on this 18-month deal is competitive but doesn't live up to the current best buy rates for one and two year bonds. However with this particular savings bond, it's not all about what's in it for the customer, it also delivers an important contribution to one of our most worthy charities.

Coventry Building Society will donate 0.05% of the total amount invested in this bond to the Royal British Legion. Previous bond sales have raised in excess of £5m for this cause since the poppy product range was launched in 2008. The much-valued work of the Royal British Legion is as important and relevant now as it has ever been and let's hope this latest bond leads to another significant donation.

Clydesdale and Yorkshire blitz fixed rate best buys

Savers looking for a decent return on their fixed rate savings will welcome the latest range of table-topping deals from Yorkshire Bank and Clydesdale Bank.

It's quite normal to see a bank or building society launch a one-off best buy deal targeted at a specific term, but Yorkshire Bank and Clydesdale Bank has thrown down the gauntlet across the board, offering the top rate for 1 year (3.60%), 2 year (4.00%), 3 year (4.30%) and 5 year (4.70%) bonds.

There are monthly interest versions of these bonds available, but this facility is only available if you have a separate account with Yorkshire Bank for the interest to be paid to.

The rates for 1 and 2 year bonds are still only paying barely half what they were three years ago, but it's time to move on and accept that we're not going to see savings rates at that level for some considerable time.

We need more examples of this sort of competition to drive up interest rates. It will be interesting to see how long these products remain on sale and whether it will provoke a positive reaction from the rest of the market.

Andrew Hagger –

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40k: SThree: SThree are a global FTSE 250 busi...

    Day In a Page

    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea
    Tunisia fears its Arab Spring could be reversed as the new regime becomes as intolerant of dissent as its predecessor

    The Arab Spring reversed

    Tunisian protesters fear that a new law will whitewash corrupt businessmen and officials, but they are finding that the new regime is becoming as intolerant of dissent as its predecessor
    King Arthur: Legendary figure was real and lived most of his life in Strathclyde, academic claims

    Academic claims King Arthur was real - and reveals where he lived

    Dr Andrew Breeze says the legendary figure did exist – but was a general, not a king
    Who is Oliver Bonas and how has he captured middle-class hearts?

    Who is Oliver Bonas?

    It's the first high-street store to pay its staff the living wage, and it saw out the recession in style
    Earth has 'lost more than half its trees' since humans first started cutting them down

    Axe-wielding Man fells half the world’s trees – leaving us just 422 each

    However, the number of trees may be eight times higher than previously thought
    60 years of Scalextric: Model cars are now stuffed with as much tech as real ones

    60 years of Scalextric

    Model cars are now stuffed with as much tech as real ones
    Theme parks continue to draw in thrill-seekers despite the risks - so why are we so addicted?

    Why are we addicted to theme parks?

    Now that Banksy has unveiled his own dystopian version, Christopher Beanland considers the ups and downs of our endless quest for amusement
    Tourism in Iran: The country will soon be opening up again after years of isolation

    Iran is opening up again to tourists

    After years of isolation, Iran is reopening its embassies abroad. Soon, there'll be the chance for the adventurous to holiday there
    10 best PS4 games

    10 best PS4 games

    Can’t wait for the new round of blockbusters due out this autumn? We played through last year’s offering
    Transfer window: Ten things we learnt

    Ten things we learnt from the transfer window

    Record-breaking spending shows FFP restraint no longer applies
    Migrant crisis: UN official Philippe Douste-Blazy reveals the harrowing sights he encountered among refugees arriving on Lampedusa

    ‘Can we really just turn away?’

    Dead bodies, men drowning, women miscarrying – a senior UN figure on the horrors he has witnessed among migrants arriving on Lampedusa, and urges politicians not to underestimate our caring nature
    Nine of Syria and Iraq's 10 world heritage sites are in danger as Isis ravages centuries of history

    Nine of Syria and Iraq's 10 world heritage sites are in danger...

    ... and not just because of Isis vandalism
    Girl on a Plane: An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack

    Girl on a Plane

    An exclusive extract of the novelisation inspired by the 1970 Palestinian fighters hijack
    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    Why Frederick Forsyth's spying days could spell disaster for today's journalists

    The author of 'The Day of the Jackal' has revealed he spied for MI6 while a foreign correspondent