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Santander fires first shots in current account war

Group boosts interest rates on some accounts to 6%

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New customer can now get 6% on selected Abbey and Alliance & Leicester current accounts.

The increased rate will apply to Abbey’s Preferred In-Credit Rate and Alliance & Leicester’s Premier Direct and Premier 50 accounts.

Santander has set out its stall in the fight to win back consumer confidence by promising an interest rate that’s 60 times more than those offered by other high street banks such as Barclays.

The move comes swiftly after the group announced it’s to re-brand Bradford & Bingley, Abbey and Alliance & Leicester branches under the Santander name.

Alliance & Leicester Premier direct account 

New customers who sign up to this or the bank’s Premier 50 account will get a market-beating 6%, up from the current  rate of 5%.

The rate applies to the first £2,500 only, after that, it drops to 0.1% and the Premier 50 account charges a monthly fee of £10.

Gillian Almond, manager for Abbey and Alliance & Leicester current accounts explained: 

‘Abbey and Alliance & Leicester continue to buck the trend in the current account market by providing even better value at a time when many other providers have reduced the rate they pay to customers with balances to as low as 0%, and the vast majority of customers, nearly nine out of ten, at the largest banks receive less than 0.5% on their money.’

Abbey Preferred In-Credit Rate account

Abbey is also offering a boosted interest rate to new customers of its Preferred In-Credit account from 8 June.

Customers will get 6% on the account, again, up from 5% but to qualify will have to pay in at least £1,000 per month or standard rates apply.

Currently, Barclays, Halifax and HSBC‘s credit interest is 0%, NatWest is paying 0.1% and Lloyds Classic pays 2.5%.

Why only for newbies?

Editor of Which? Money, James Daley said: ‘It’s great to see Santander offering such competitive interest rates on their current accounts, but it’s disappointing that they are not passing on these rate increases to their existing customers as well. 

‘As usual, the best rates are reserved for new customers, while the loyal long-standing customers won’t benefit from the increase at all.’

See what else is available by checking out the independent Which? Best Buy tables for current accounts.

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