'Super brand' Santander increases current account credit interest to 6%
Santander has today announced its current account brands will see an increase in credit interest rates to six per cent AER.
Abbey and Alliance & Leicester will be offering customers the increased rate fixed for a year.
The one per cent increase on Abbey's preferred in-credit rate current account and Alliance & Leicester's premier direct and Premier 50 accounts, will be available on accounts opened from Monday (June 8th).
Kevin Mountford, head of banking at moneysupermarket.com, said: "Santander are firmly establishing its place as the new super-brand in town.
"At six per cent these deals are streets ahead of competing current accounts, and account holders can be assured the rate will not be going down any time soon, with Santander confirming the six per cent offer will be fixed for one year. This is undoubtedly an enticing option for those who remain permanently in the black.
"With Alliance & Leicester and Abbey now effectively offering just one rate between them, the news is unlikely to allay concerns over the increasing lack of choice in the banking sector. However, we should welcome this as a positive sign that Santander has the consumer's wishes at the forefront of its product development."
The balance of credit interest will be paid up to is £2,500, with Lloyds offering just 2.5 per cent for a similar product. In comparison to other high street banks, NatWest offers just 0.1 per cent credit interest, as does the Royal Bank of Scotland, although this is without a limit or minimum deposit, according to moneyfacts.
Michelle Slade, finance expert from Moneyfacts.co.uk said: "Within these testing times it imperative to make every penny count and an interest rate of 6.00 per cent AER is streets ahead of the rest of the market.
"Current accounts are an important part of any customer's financial portfolio and with many of the other high street providers paying no interest at all, customers really should consider switching."
Earlier this week, Andrew Hagger from moneynet.co.uk, looked at whether it was worth the trouble of switching current accounts to take advantage of such offers like the one from Santander.
He said: "As things stand, the Santander brands of Abbey and Alliance & Leicester offer the highest return on current account balances.
"However for people who always remain in the black but only keep a small credit balance in their current account, then the Reward Current account from Halifax wins hands down. As long as you pay in a minimum of £1,000 each month, you'll receive a net monthly payment of £5 each month (£60 per year) irrespective of your balance.
"Apart from the Halifax, Abbey & A&L accounts, nobody else comes close. Lloyds TSB pays 2.5 per cent on the first £2,500 with the rest of the providers in the market barely worth mentioning."
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