Over the past month, Santander has announced two drastic interest rate hikes on its savings accounts. Notably, the former was in response to a move by the Bank of England earlier in November while the latter saw massive changes in the bank’s current account rates. With many families struggling with the cost of living, Brits will be looking for accounts with high interest rates that can provide decent returns despite the economic downturn.
Santander has confirmed that it will increase the deposit interest rate on its 1I2I3, Select and Private current accounts. This will be the fifth time this year that the bank has chosen to do so.
With this decision, the accounts will change from 1.50% AER/1.49% gross (floating) to 1.75% AER/1.74%. AER/gross (varies). This will apply to balances up to £20,000.
This higher interest rate will automatically apply to current accounts from 8 November 2022. Following the bank’s decision, Santander current account customers can now earn up to £347.22 in interest per year.
Additionally, all cashback customers earned on selected household bills will be paid by direct debit. Savers can also continue to access preferential rates on other bank products through 1I2I3 World.
READ MORE: Brits urged to consider ‘simple’ boiler hack that could cut energy bills by £112 a year
The UK is currently in the midst of a cost of living crisis caused by rising energy bills and inflation. Last month’s consumer price index (CPI) inflation rate hit 11.1%, putting additional pressure on households.
To mitigate the damage caused by inflation on personal savings, the Bank of England has consecutively raised the UK base rate in recent months. This is the central bank’s charge on other banks and other lenders when they borrow money.
Earlier this month, the Bank of England’s Monetary Policy Committee (MPC) voted in favor of a 3% rate. In response, various banks and building societies passed this on to their products.
DO NOT MISS
Following the central bank’s decision to increase the domestic basis, Santander confirmed that it would raise rates on the bank’s range of savings and mortgage products to better support its customers.
Since November 2, the financial institution’s Junior ISA has seen its interest rate drop from 1.50% to 2%. From December 2, Santander will increase the rate on paid accounts from 0.2% to 0.40%.
This will include the bank’s Everyday Saver, Instant Saver, ISA Saver and Easy ISA accounts. Notably, Santander has made the decision to raise rates for those looking to enter the real estate market or start saving for the first time.
The banks’ Flexible Saver for Kids account will see its interest rate drop from 0.85% to 1.25%. On top of that, Santander’s First Home Saver Account will increase to 1.65%, while ISA Purchase Assistance will also increase to 1.65%.
READ MORE: Attendance Allowance: 6 myths keeping millions of pensioners from claiming up to £370 a month
While the UK expects inflation to continue to hurt savings for the foreseeable future, the impending recession is expected to bring them down dramatically. Experts are warning Britons to prepare financially for the likelihood of a full-scale recession.
Lucinda O’Brien, savings expert at money.co.ukexplained why savers should make their money “recession-proof” despite inflation continuing to chip away at returns for many people across the country.
She explained, “Many people choose to save or invest their money to protect their wealth. However, you should consider your savings goals before choosing a savings product to ensure you get the most out of it.
“For short-term savings, you might want a savings account where your money is easily accessible, such as an instant access savings account or a cash ISA.
“If you’re thinking longer term, like saving for retirement or a major purchase like a house, an ISA investment is a good option.
“If you don’t know how to manage your savings, it’s a good idea to consult a financial advisor before making a decision. Making your money recession proof can be a difficult task.
“The key thing to remember is not to panic and make impulsive decisions. Take the time to carefully consider your financial situation: your income, your expenses and any assets you may have, as this will be essential in understanding how to best protect your money against the recession. »