Santander to pay 6% on current account balances

Jun 6 2009 by Peter McCusker, The Journal

SPANISH banking giant Santander flexed its muscles in the current account market with the announcement that it will pay interest of 6% on account balances.

The group said it was increasing the interest it paid on current accounts offered by its two subsidiaries, Abbey and Alliance & Leicester, by 1% to 6% for new customers from Monday.

The rate will be fixed for one year on balances of up to £2,500, after which it will fall to 1%.

In order to qualify customers with Abbey’s Preferred In-Credit Rate account will have to pay in at least £1,000 a month, while those with Alliance & Leicester’s Premier Direct and Premier 50 must pay in £500 a month.

Interest of 0.1% will be paid to people who fail to meet these criteria and on balances over £2,500.

Gillian Almond, manager for Abbey and Alliance & Leicester current accounts, said: “Abbey and Alliance & Leicester continue to buck the trend in the current account market by providing even better value.

“The vast majority of customers, nearly nine out of 10, at the largest banks receive less than 0.5%.”

Kevin Mountford, head of banking at moneysupermarket.com, said: “At 6% these deals are streets ahead of competing current accounts.

“This is undoubtedly an enticing option for those who remain permanently in the black.”

But he added: “With Alliance & Leicester and Abbey now effectively offering just one rate between them, the news is unlikely to allay concerns over the increasing lack of choice in the banking sector.”