Santander launches 5% regular savings account: is it any good?

Published by Tom Wilson on 22 March 2016.
Last updated on 22 March 2016

Santander customers can now earn 5% interest on a new regular savings account, so Moneywise evaluates how good the bank's new offer is. 
 
The Regular eSaver account is available to new and existing Santander current account (123 or otherwise) customers. (See our Current accounts roundup for the best buys.)
 
Savers can stash up to £200 a month into the Regular eSaver by standing order, but only from a Santander account.
 
Unlike most regular savings accounts, customers can change their contribution each month, providing they don't go over the £200 limit. Save too much, and Santander says it 'reserves the right' to switch the account to one paying 0.25% interest. 
 
The account can be opened in branch or by phone, but once open money can be managed online or via Santander's mobile banking app. Savers can withdraw their money at any time without penalty.
 
However, the catch is that the account only pays 5% interest for the first year. After that, any money saved is transferred to an Everyday Saver account, which pays a paltry 0.25%.
 

Moneywise verdict:

 
This is Santander's highest paying account and as with all regular savers, while it's not much help as a home for existing savings, it's a good way to get started.
 
However, it's not the best regular saver on the market. M&S Bank and First Direct both pay 6% on regular savings accounts to existing current account holders, while TSB and Nationwide both match Santander's 5% regular saver account for their own current account customers. 
 
Finally, for people saving for a house deposit, a Help to Buy Isa could be a better option. These let first time buyers save up to £200 a month, plus a one-off £1,000 deposit when the account is first opened.
 
The best Help to Buy Isas (from Santander and Halifax) pay 4%, which is slightly lower than the Santander regular saver. But crucially, the government will add £1 for every £4 saved (up to a maximum £3,000 bonus) in a Help to Buy Isa. See our Top Help to Buy Isas round-up for more information on how they work.
 

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This is very misleading,

This is very misleading, Saving £200.00 a month will attract 5% on the first £200.00 which will be saved for the full 12 months. subsequent saving of £200.00 a month would decrease as each payment there- after would be saved for 11mths 10mths and so on, Your projection of interest given to me for the whole period was £65.00 which is 2.70% not 5%. As 5% would be £ 120.00. I would welcome your comments.
Thank You
Alan J Williams

Hi Alan, yes your

Hi Alan, yes your interpretation is correct. Saving £200 a month in a regular saver paying 5% would return around £65 in interest at the end of the year. This is because only the first £200 is earning 5% interest for the full 12 months. These accounts are intended to reward those saving a smaller amount each month. If you have a large lump sum you might find it better to open a different type of savings account - click here to see our guide to the week's best accounts.