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Santander launches new regular savings account paying 8% interest

A regular savings account allows savers to put aside a certain amount of money each month in exchange for a higher interest rate

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Santander has launched a new regular saver(Image: Getty Images)

Santander launched a new regular saver account that pays 8% interest.

A regular savings account allows savers to put aside a certain amount of money each month in exchange for a higher interest rate.

The new Santander account comes with a rate of 8% which includes a 5% bonus for the first 12 months. After 12 months, the rate reduces to 3%. The rates are variable, which means they can be changed.

Santander customers save up to 200 a month through this regular saver, meaning you maximum they can build up with interest after one year is 2,504, then 5,018 in year two.

Customers can make withdrawals without penalties, but only by moving the money to a Santander current account.

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The Regular Saver is exclusively available to all Santander current account customers.

Joo Soares, Head of Savings at Santander UK said: We know customers want savings accounts that are easy to understand, offer a competitive rate and deliver value.

Thats why our new Regular Saver rewards customers with a market leading rate, while supporting customers who want to build up a habit of saving regularly.

New customers who switch their current account to us using the Current Account Switching Service can enjoy even more benefits, such as 180 to save or spend.

Santander isn't the only bank offering a regular saver. Zopa pays 7.1% variable for six months on up to 300 a month.

First Direct has a 7% regular saver fixed for one year, with deposits of up to 300 a month, while Co-op Bank also offers 7% but the amount you can save each month is slightly less at 250.

In terms of normal easy-access saving accounts, the best rate available right now is 5%. Revolut pays 5% to new customers for six months, which includes a 2.9% variable rate and a six month 2.1% bonus rate.

Cahoot also offers a 5% rate on up to 3,000. The top one-year fixed rate account is 4.81% from StreamBank, while for a five-year fixed rate you can get 4.9% from Afin.

If you are basic-rate (20%) taxpayer then you can earn up to 1,000 in savings interest each tax year before you start to pay tax on interest you've earned.

This is known as the Personal Savings Allowance. For higher-rate (40%) taxpayers, the Personal Savings Allowance is 500 every tax year.

Additional rate taxpayers (45%) don't get any Personal Savings Allowance. If you earn below the personal allowance of 12,570, there is a 5,000 starting rate for savings.

When you start to earn above this amount, you lose 1 of your 5,000 starting rate for savings for each 1 you earn above the personal allowance.

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