A HIGH street bank is giving away £50 free to customers who move their savings account to it from elsewhere.
Santander will give customers a £50 e-voucher if they transfer an Isa of at least £10,000 from another provider into one of its fixed rate ones.
Santander is giving customers £50 if they transfer their Isa[/caption]
The voucher can be spent at more than 100 restaurants, supermarkets and clothes stores including Argos, B&M and Primark.
Customers will be sent the code to redeem the voucher automatically by email within 14 days of the transfer being complete.
Andrew Hagger, personal finance expert at Moneycomms, said: “This is a good incentive – especially for people who may be sitting on some poor performing Isas.”
What is an Isa?
Isa stands for Individual Savings Account.
There are four types: cash Isas, stocks and shares Isas, lifetime Isas and innovative finance Isas.
The main benefit of an Isa is that all the money you pay in is tax-free.
This means that you do not need to pay tax on the amount you have saved or any interest you earn.
Every tax year you can save up to £20,000 in one Isa account or split your allowance across multiple accounts.
The tax year runs from April 6 to April 5.
You can open one with most banks and building societies.
Some providers will have restrictions on the minimum amount you can pay in and may require you to deposit a certain amount in order to open an account.
What Isas does Santander have?
Santander currently has three fixed-rate Isas on offer.
The interest rate on these accounts is fixed, which means that it will not go up or down.
What is a Lifetime ISA?
FIRST-time buyers saving into a LISA can stash up to £4,000 into this account each year tax-free.
The government will add a 25% bonus to your savings, up to a maximum of £1,000 per year.
For example, if you save £4,000, you’ll get a £1,000 bonus.
The amount you pay in is linked to your annual ISA allowance (£20,000 for 2023/24) – for example, if you pay £1,000 into your LISA, you can still pay £19,000 into other ISA products.
Any bonus you earn doesn’t count towards your ISA allowance.
You can open a Lifetime ISA with any bank, building society or investment manager that offers the product.
You can only open a LISA if you’re aged 18–39.
You can hold multiple Lifetime ISAs, although you can only pay into one each tax year.
You can also transfer your Lifetime ISA to another provider, for example, to get a better interest rate.
If you want to use a Lifetime ISA to buy a home, there are a few restrictions you need to keep in mind:
- Only first-time buyers can use Lifetime ISAs to buy a home, which means you can’t own, or have owned, a home in the UK or anywhere in the world.
- You’ll need to be buying a home for no more than £450,000.
- You must be buying a home you plan to live in – the scheme isn’t for buying a home you want to rent out, or a holiday home.
If you don’t use it to buy your first home, you can continue paying into a LISA until you’re 50.
You can then make full or partial withdrawal from your LISA, without paying a fee, when you turn 60.
You need £500 or more to open one of these accounts.
The one-year fixed-rate Isa gives you 4.01% interest on your nest egg.
If you transferred the minimum £10,000 this would give you a return of £33.42 a month, or £401 over the course of a year.
The 18 month fixed-rate Isa has a slightly lower return, at 3.91%.
On a £10,000 nest egg you would get £32.58 in interest each month, or £391 a year.
The two year fixed-rate Isa has the least generous interest rate of all of the accounts.
It has an interest rate of 3.81%, which would give you £31.75 a month, or £381 a year, on a £10,000 balance.
If you want to withdraw money from the account before its fixed-term has ended then you will need to close your account.
A charge equivalent to 120 days’ interest will be applied.
How do I transfer my Isa?
First you need to apply for or upgrade your existing Santander Isa to a Fixed Rate Isa.
Once the account is opened, you must complete a transfer in instruction.
Santander suggests that you do this on the day you open your account or upgrade.
You can do this online or in a branch.
The instruction asks for your non-Santander Isa to be transferred to your new Fixed Rate Isa.
You need to do this within the first 14 days of opening your Isa account.
When you complete the form you will need to ask for a full transfer of your existing non-Santander account, which must have a balance of £10,000 or more.
You must provide an up-to-date email address which the bank can use to email you the code to redeem your e-voucher.
Your account could take up to 30 days to transfer.
You will be sent a code to redeem your e-voucher within 14 days of your transfer completing.
How does it compare to others?
Virgin Money has the best one-year fixed-rate cash Isa of all banks and building societies.
It offers a return of 4.61% on your nest egg.
If you had £10,000 in savings this would give you £38.42 a month in interest – £5 more than the best Santander account.
Over the course of a year you would earn £461 in interest, £60 more than with the Santander account.
If you take into account the £50 bonus you would still be £10 better off after a year with the Virgin Money account.
Plus there is no minimum amount you need to open this account, which makes it a good option for savers with smaller pots.
Rachel Springall, finance expert at Moneyfactscompare.co.uk, said: “Savers need to be wary of cash sweeteners if the account itself does not offer the best value compared to other similar accounts.
“Santander’s rates are not market leading and there are a plentiful amount of challenger banks offering much higher rates.”
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