Santander launches new savings bonds

Three new savings bonds have been launched by Santander. But are they any good?

Santander has shaken up its savings accounts and launched three new fixed rate bonds.

The bonds are for 12-, 18- and 24-month terms, and while the interest rates are competitive, they aren’t market leading. Let's take a look at just how they compare.

Fixed rate bonds

The one-year bond pays 2.00% interest on balances of at least £500 and 2.10% when you deposit £200,000.

But if you want a higher rate of interest several other providers have better products on offer.

The opening deposits vary for these. Of the top-paying deals, only Virgin Money asks for a smaller deposit of £1.

Top one year accounts

18-month bond

Santander has also launched an 18-month bond. This again pays different rates of interest depending on how much money you have in the account. Those savers with at least £500 will get 2.50% while those with £200,000 will get 2.60%.

This one is only available to customers who already have a Santander 123 Current Account, or a 123 Credit Card. But both the current account and credit card cost £24 per year, so you’ll need to work out if it’s worth paying this monthly sum in return for the interest.

The 18-month bond market is pretty sparse at the moment, but it’s possible to get 2.50% with Metro Bank when depositing £500. This one is branch-based though so you can only benefit if you are within reach of a branch.

Bank of London and The Middle East also has an 18-month account paying 2.65%, but this requires a hefty deposit of £25,000.

Two-year bonds

Santander has also launched a two-year bond which pays 2.30% on £500 or 2.40% on £200,000.

Again, there are better deals around. A rate of 3.03% is available on deposits of £1,000 with the Islamic Bank of Britain for example.

The banks and building societies listed below all offer higher rates of interest. But some of these also ask for a larger starting deposit, so might not be suitable for everyone.

The account offers more interest when you have more money stored away. However, if you’re prepared to put £200,000 into a savings account you may get a better rate of interest if you opened up an account with a longer term - such as a three- or five-year bond.  It's important to remember that the Financial Services Compensation Scheme only protects the first £85,000 you place in any financial organisation in a savings account.

Top two year accounts

Disappearing accounts

Savers are getting a rough ride at the moment with accounts disappearing regularly. While it’s good new accounts are being launched, these from Santander are replacing similar products which were paying a higher rate of interest.

The Spanish bank withdrew a one-year account paying 2.30% on balances of £500, an 18-month bond paying 2.90% and a two-year deal paying 2.50% on the same sum.

But it’s not alone - banks across the sector have been following a similar pattern. In fact in 2012 350 top savings accounts were withdrawn, leaving savers with little option to earn interest.

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The best instant access savings accounts

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