Santander Edge review: Earn 4% interest and 1% cashback

Is this new account from Santander any good?

This new current account offers cashback on spending and bills and interest on savings, though you’ll have to pay a monthly fee. Here’s how it’ll work, and how it compares to accounts such as the Santander 123 and Chase Bank.

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What is the Santander Edge account?

This current account from Santander is open to new and existing customers. It replaces the 123 Lite account for new customers, though existing 123 Lite customers won’t be affected.

You’ll be able to earn 1% back on both spending with your debit card and direct debits on your bills. However, they’ll be limited to certain categories. There’s also a £10 limit per month on each form of cashback, so a £20 max combined, or £240 a year.

The savings rate is 4%, but drops to 3.5% after a year and is only paid on balances up to £4,000.

This account isn’t free. It’ll cost you £3 a month, or £36 a year. This is £1 more than the Santander 123 Lite and £1 less than the full Santander 123 account.

Unlike with reward accounts at other banks there’s no way to avoid the fee, so you need to take it into account when working out how much you’ll make from the cashback and savings interest.

Santander Edge & cashback on bills

You’ll earn 1% on selected household bills. These are the same broad categories covered by the Santander 123 accounts, though that lower rates on gas, electricity and water. There’s no bonus cashback on Santander products like mortgages, which you can still get via the Santander 123 account.

• Council Tax bills (including Rates in Northern Ireland) 
• Gas and electricity bills 
• Water bills 
• Mobile and home phone bills, broadband and paid-for TV packages 

How much cashback will you make?

With the bills, it’s the same amount required to hit the £10 cap, and I think that’s incredibly unlikely. Even with energy bills on the rise, and Council Tax set to follow, the average house in band D will be spending around £400 a month come next spring.

After that, the vast majority of households would need a massive pay TV bill and expensive mobile phone contract to get even close to a grand each month.

If you’re savvy with those latter bills (by axing pay TV and going SIM-only on your phone), they’d amount to less than a tenner combined. Put broadband at £30 (you can get it for less) and water at £40 and you’re maybe nudging £500 combined. So I’d expect average households who have shopped around to get £5 at most from this part, or £60 a year.

Though of course you could factor in the monthly fee against the total amount you make from this account, I think it makes sense to subtract the total here as you’re not likely to earn this money from another source. But do this and it means your profit could be as low as £2 a month, or £24 a year.

How does it compare to other ways to get cashback on bills?

If you already have a Santander 123 Lite account then I’d 100% stick with that. You’ll get higher rates on water (3%), gas (2%) and electricity (2%) bills.

If you don’t have that one, then your other main option is the full 123 account, which is still on offer to new customers. This offers the same improved cashback rates but you’ll pay £4 a month.

For that extra £1 a month (compared to the Edge) to be justified, you either need a Santander mortgage or insurance policy, or the three bills getting better cashback rates would need to cost £100 a month. Unless that’s possible, the Edge has the edge.

You could look at using a cashback card instead, with Chase offering 1% for a year and American Express’s Nectar card offering the same (but as Nectar points). There’s no cap here but you might find Council Tax excluded, while you’d lose out on a direct debit discount from energy bills.

Santander Edge and Debit card cashback

You’ll also earn 1% from using your debit card – but only not on every purchase. The money is paid on transport and grocery spending. Here are the qualifying subcategories:

Transport

• Service stations and UK petrol stations 
• Automated fuel dispensers 
• Suburban and local commuter passenger transport including ferries 
• Passenger rail journeys 
• Bus journeys 
• Electric vehicle charging points 

Groceries

• Supermarkets and grocery stores 
• Convenience stores 
• Food markets 
• Specialty food stores 
• Vending machines 

How much cashback will you make?

To get the £10 a month on debit card spending, you’d need to spend £1,000 a month in those categories. Supermarket spending on its own won’t hit this mark for most households, though filling up a car each month will improve your return.

It’s obviously going to be easier to max out this category for those who commute – though if you buy an annual season ticket you’ll miss out.

I’d say expect a spend of £500 a month, so £5 cashback, and anything more is a bonus.

How does it compare to other cashback cards?

Frankly I wouldn’t bother. You can earn 1% with fewer restrictions on eligible categories from Chase Bank, and there’s not fee attached. However this cashback does only last for 12 months.

But even when that year is up, when it comes to supermarkets and most travel expenditures you can use the highest paying Amex Nectar, which again can be used on other purchases – as long as you’re happy to receive the money back as Nectar points. There’s a £25 annual fee with this card from year two onwards, but other Amex offers should more than cover this.

Santander Edge & interest on savings

If you have the Edge current account you’ll be able to open up a Santander Edge saver. This 4% rate contains a 0.5% bonus for 12 months, so it’ll drop to 3.5% after a year (though as the rate is variable it could go up or down in this time).

The interest is also only on balances of up to £4,000. Anything in the account above this will earn nothing at all.

You’re allowed only one Edge saver per Edge current account, which means at most a personal and a joint account. However, joint account holders can get one saver each, so between the two of you that could be four Edge savers. However that would be three lots of the fee.

How much interest will you earn?

Assuming you’re accounting for the fee against the cashback, and you have the full £4,000 saved in the account for a year, you’ll make £160 in interest. That’s pretty decent right now.

But if you didn’t factor in the fee on your cashback rates (perhaps you already have the 123 Lite account, or you open an additional joint Edge account), then you’ll need to add them here. That £36 a year charge reduces the effective rate you receive. Here are some examples for the first year.

Amount saved	Annual Interest	Interest after £36 fee	Effective interest rate
£500.00	£20.00	-£16.00	-3.20%
£1,000.00	£40.00	£4.00	0.40%
£1,500.00	£60.00	£24.00	1.60%
£2,000.00	£80.00	£44.00	2.20%
£2,500.00	£100.00	£64.00	2.56%
£3,000.00	£120.00	£84.00	2.80%
£3,500.00	£140.00	£104.00	2.97%
£4,000.00	£160.00	£124.00	3.10%

Of course if you have the joint account with two Edge saver accounts, the rate will start to improve, as this table below shows (the amount is the cumulative amount across two savers but one fee paid)

Amount saved	Annual Interest	Interest after £36 fee	Effective interest rate
£4,500.00	£180.00	£144.00	3.20%
£5,000.00	£200.00	£164.00	3.28%
£5,500.00	£220.00	£184.00	3.35%
£6,000.00	£240.00	£204.00	3.40%
£6,500.00	£260.00	£224.00	3.45%
£7,000.00	£280.00	£244.00	3.49%
£7,500.00	£300.00	£264.00	3.52%
£8,000.00	£320.00	£284.00	3.55%

How does it compare to other savings accounts?

When you compare the headline interest rates it’s a really decent rate. But it’s not the best. Barclays offers its current account customers 5.12% on up to £5,000 with no fee. And there are regular savers from Natwest and Lloyds paying more than 5%, with Halifax offering 4.5%. All better places for your cash.

And if you’re looking at returns after the fee (as shown in this table), then there are even more options that can beat it. In fact you’d need to have at least £3,000 to equal or beat the best easy-access accounts. Even then, you’re probably better off just opening up one of the alternatives.

Santander Edge vs Santander 123 Lite account?

With the launch of the Edge account, you’re no longer able to open a 123 Lite account. This is a real shame as that offered higher cashback rates on bills. However existing 123 Lite customers can keep their account, and I’d suggest they do rather than switch to the Edge account.

Santander Edge vs Santander 123

The full Santander 123 account remains an option for new customers. The Edge account is £1 cheaper each month and gives you a higher rate of interest – but you’ll get that interest on a lower balance and get reduced cashback on some categories.

I’d ignore the savings on the full 123 account as that rate can easily be beaten in a number of places, so really it comes down to whether the increased cashback will cover the extra quid.

Is the Santander Edge any good?