But some savers could be better off opting for a best buy ISA rather than accepting the incentive.
Santander’s new range of ISA products, which can be opened online or in branch from today, are:
- One-year fixed rate ISA – 4.15% AER
- 18-month fixed rate ISA – 4.05% AER
- Two-year fixed rate ISA – 4% AER
The bank is offering a £50 cashback e-voucher to customers who transfer an ISA of at least £10,000 from another provider into a Santander fixed rate ISA. The voucher can be spent at more than 100 outlets, including restaurants, supermarkets and clothing stores.
Customers will receive their code to redeem their voucher automatically by email within 30 days of the completed transfer.
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Saket Jasoria, head of savings at Santander UK, said: “With the new tax year just around the corner, we know many will be considering how they can make their money work harder for them. That’s why we’re pleased to launch our new fixed rate ISAs, giving customers tax-free competitive returns, along with our £50 e-voucher cashback offer, as an added treat this spring.”
Do the sums
It’s important not to be lured in by enticing switching offers when choosing an ISA. In some cases, they will be worthwhile, but if you have a relatively high balance in your cash ISA, you might be better off searching for the best fixed rate ISA available.
For example, if you had £10,000 saved in an ISA and were tempted by Santander’s offer, it would be worthwhile.
A £10,000 deposit in Castle Trust Bank’s best buy ISA paying 4.49% would earn £449 interest in a year. Saving the same amount in Santander’s one-year ISA paying 4.15% would earn you £415 in interest – but the £50 voucher would bring your total income from the investment to £465, £16 more than you’d get with Castle Trust Bank.
Andrew Hagger, founder of MoneyComms, said: “With the £50 bonus voucher, these rates from a high street provider are actually market-leading on the one-year ISA, and the two-year deal isn’t far off and pretty competitive too.
“It’s good to see the ISA market hotting up as we approach the tax year cross-over, and deals like this offer good value for savers in search of better returns.”
However, if you have a much higher ISA balance to transfer, it makes sense to look for the highest rate possible. For example, saving £20,000 in Castle Trust Bank’s one-year bond for a year would earn you £898 in interest. Saving £20,000 in Santander’s one-year ISA would earn £830 interest in a year. Adding the £50 voucher brings the total earned to £880 – £18 less than you’d get with Castle Trust Bank.
