Proactive Investors - Santander (BME:SAN) has turned up the heat in the battle for savers’ cash by launching its highest-paying easy-access account for 14 years.
The move by the Spanish-owned bank comes just days after NS&I offered its highest rates for decades and means savers can earn 5.2% on up to £250,000 without having to lock their cash up.
Personal finance experts said it is the highest rate of annual interest paid on an easy-access savings account since the start of 2009 and most likely the result of NS&I’s action last week.
NS&I stunned the market last Wednesday by offering 6.2% on government-backed guaranteed one-year bonds, the highest rate since they were first introduced in 2008.
Santander’s easy-access account though is not fixed and allows transfers to another account at any time online, by phone or in a branch.
Savers might need to be quick as the bank cautioned the account will only remain open until 17 September and might close before then if demand is too strong.
Interest rates on Santander’s one-year and two-year fixed bonds were also raised to 5.05% and 5.1% respectively.
Andrea Melville at Santander said: 'We're pleased to deliver this top-of-market product for our customers, providing the convenience of an easy-access account, to help build up their savings."
Furness Building Society previously offered the highest rate on an easy-access account at 5%.
In another sign of the battle for savers’ cash, Virgin Money (LON:VMUK) has also raised rates on its “Easy Access Cash Isa Exclusive” account to 4.51% and launched a new one-year fixed-rate Isa paying 4.25%.
Major banks have been accused by the government of paying savers too little and leaning on customer inertia to pad profit margins.
Only last week, the financial regulator, the Financial Conduct Authority (FCA), warned the banks of action if they fail to give customers what it considers to be fair value.
Around £1.5 trillion is held in savings accounts, excluding NS&I accounts, according to the FCA, with £250 billion in accounts that earn savers zero interest.