But savers might 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:
- 1-Year Fixed-Rate ISA – 4.31% AER/ tax-free
- 18-month Fixed-Rate ISA – 3.91% AER/ tax-free
- 2-year Fixed-Rate ISA – 3.81% AER/ tax-free
To get the £50 voucher, customers need to open a Santander Fixed Rate ISA and transfer an ISA of at least £10,000 from another provider.
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 14 days of the completed transfer.
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Do the sums
However, savers would be better off searching for the best fixed rate ISA interest rates on the market, rather than taking Santander’s offer.
For example, the best one-year fixed rate ISA available at the time of writing is from Punjab National Bank, which pays 4.8% on its one-year bond. Saving £10,000 in the bond for a year would earn £480 in interest.
In comparison, Santander’s one-year fixed rate ISA pays 4.31%, so a £10,000 investment would earn £431 interest in a year. Adding the £50 voucher brings the total earned to £481. So, this would net you an extra £1 over picking the best ISA – but £50 would be in the form of a voucher, rather than cash.
When it comes to Santander’s 18-month fixed rate ISA, which pays 3.91%, a £10,000 investment would earn £592 in interest in 18 months. The £50 voucher brings the total to £642.
The best 18-month fixed ISA on the market is from Newcastle Building Society, which pays 4.3%. A £10,000 investment would earn £651.88 in interest over 18 months – almost £10 more than you’d get in total from Santander.
Santander’s two-year fixed rate ISA pays 3.81% AER. So a £10,000 investment would earn £776.52 in interest over two years. The £50 voucher brings the total to £826.52.
The best buy two-year fixed ISA is from State Bank of India and pays 4.5% AER. Over two years, a £10,000 investment would earn £920.25 in interest. This equates to £93.73 more than you’d get from Santander, including the £50 voucher.
