Santander launches new range of ISAs with competitive interest rates

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Santander has launched a range of ISA products in an effort to give savers “greater returns”. The new range includes an easy access eISA, as well as a choice of three fixed rate accounts with interest rates ranging from 3.2 percent to 4.25 percent.

Cash ISAs are a popular savings account amongst Britons, as these come with additional benefits, such as enabling money to grow without having to pay tax on the interest above the Personal Savings Allowance (PSA).

These accounts also typically offer some of the highest interest rates on the market, however, they can come with a few more restrictions, like penalty charges for early access or transfers.

Santander’s new ISA range includes:

  • eISA (Issue 18) – 3.2 percent AER/tax-free (variable)
  • One Year Fixed Rate ISA – 4.15 percent AER/tax-free (fixed)
  • 18 Month Fixed Rate ISA – 4.25 percent AER/tax-free (fixed)
  • Two Year Fixed Rate ISA – 4.20 percent AER/tax-free (fixed)

Commenting on the range, Andrea Melville, managing director of retail finance at Santander UK, said: “An ISA helps customers save for the future completely tax-free and with the new tax year approaching, we have boosted our ISA rates to give our customers greater returns.

“On top of this, customers can benefit from our voucher offer to treat themselves this spring.”

New and existing customers who transfer an ISA of at least £10,000 from another provider into a Santander Fixed Rate ISA will benefit from £50 cashback as an e-voucher, which can be spent at over 100 outlets, including restaurants, supermarkets, clothes stores, and subscription services.

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A full list of retailers can be found here. Customers will receive their voucher code automatically by email within 30 days of the completed transfer.

Santander eISA (Issue 18) – 3.2 percent

The account can be opened with a minimum opening balance of £500 and interest is calculated daily and applied annually in March.

ISA transfers in and out can be made at any time and withdrawals can also be made freely by transfer to another account in online and mobile banking. To open, savers must be UK residents aged 16 or over.

Santander fixed rate ISAs

To open the One Year, 18-Month, or Two Year Fixed Rate ISA, savers must also deposit at least £500. Interest is calculated daily and paid annually or at maturity, and the maximum balance at any time is £2million.

Unlike the eISA, partial withdrawals aren’t allowed. People can withdraw money from this account early by closing it, however, there will be a penalty equivalent to 120 days’ interest if this takes place.

The ISA allowance for the 2022/23 tax year is £20,000 and deposits can be made up to and including April 5, 2023.

The tax year will renew on April 6, after which the £20,000 ISA allowance will restart too, but savers are being urged to make the most of the allowance sooner rather than later.

Myron Jobson, senior personal finance analyst at interactive investor, said: “We’re facing the highest overall tax burden in a generation thanks to the deep freeze of tax thresholds and allowances which, in tandem with wage inflation, means we’ll be more in tax in the years to come.

“The upcoming cut in annual tax-free allowance for capital gains and dividend taxes will add insult to injury for investors with cash held outside ISAs and pensions tax wrappers.”

He continued: “The tax-free ISA allowance work on an annual ‘use it or lose it’ basis, so it makes sense to make the most of this year’s allowances – if you can afford to do so amid the cost of living crisis.”

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