Is it worth paying the £3 monthly fee for this high interest rate?
The Santander Edge Saver has just upped it’s interest rate from 4% to 7%, which sounds fantastic – it’s certainly higher than any other easy access account right now.
But there are drawbacks, including the requirement to open a Santander Edge current account (which has a monthly fee), a limited balance that earns interest and a bonus that ends after 12 months.
When you take all that into account, just how much will you earn? Here’s our analysis.
What is the Santander Edge current account?
The key requirement for the Edge Saver account is you must have a Santander Edge current account. Opening this be subject to a credit score – something you don’t need to think about with most savings accounts.
The account itself can earn you cashback on some spending and bills. Unless you’ve already got one of the now defunct Santander 123 or 123 Lite current accounts, this is probably the best way to earn a little on your key bills. Though at 1% don’t get too excited.
Likewise the 1% on debit card spending is limited to just supermarket and transport purchases – something you can already get via other cashback cards.
Both sets of cashback are capped at £10 a month. Even though that means the potential to earn £240 a year, I don’t think you actually will – as my analysis shows.
And a big reason for this is the £3 monthly fee. That £36 a year will wipe out most of the cashback you earn on your bills. So why bother, well if the £36 is accounted for, it means you will be getting the full 7% on your savings in the linked Edge Saver.
What is the Santander Edge Saver?
If you have the Edge current account you’ll be able to open up a Santander Edge Saver account.
The Edge Saver pays a 7% interest rate, but that contains a 2.5% bonus for 12 months, so it’ll drop to 4.5% 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.
The joint account hack
Each person is allowed only one Edge Saver per Edge current account, but there is a way you might be ale to get more.
Joint Edge account holders can get one saver each even though they’d have just one current account. That helps limit the impact of the fee on savings held by the couple, so you’ll earn even more.
And you could each have a personal account as well. So between the two of you that could be four Edge savers. However that would be three lots of the fee.
Though the new higher savings rate doesn’t mean you shouldn’t consider paying for more than one of the Edge current accounts.
How much interest will you earn in the first year?
Assuming you’re accounting for the fee against the cashback, you’ll get the full 7% back on your savings. So if you have the full £4,000 saved in the account for a year, you’ll make £280 in interest in the first year. 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 don’t pay the bills themselves), then you’ll need to deduct it from your earnings.
The tables below show how much you’d earn on different balances at the full rate, plus what you’d earn after the fee and the real interest rate when that happens.
I’ve also split the analysis to show how this builds if you are able to open up additional Edge Savers by having a joint Edge current account, or a mix of personal and joint accounts.
Remember this is just for the first year. Once that bonus is gone you’ll want to shop around to see if it’s worth moving your money to a better paying account elsewhere. At the time of writing you can beat 4.5% in a number of easy access accounts.
One Edge account with one Edge Saver
Even with the fee, it’s possible to get a decent rate between 5.2% and 6.1%.
Obviously those that want to factor in the fee will want to avoid having less than £500 in there a it’s a net loss. I’d suggest you also want to look elsewhere if you have £2,000 or less in savings.
|Amount saved||Annual Interest||Interest after £36 fee||Effective interest rate|
One joint Edge account with two Edge Savers
Of course if you have the joint account instead you can open two Edge saver accounts and pay just one fee. Then the rate starts to improve, as this table below shows.
The amount saved is the cumulative amount across two savers, even though you’d only have up to £4,000 in each one.
|Amount saved||Annual Interest||Interest after £36 fee||Effective interest rate|
One personal Edge and one joint Edge account with three Edge Savers
You can build on this again if you have another £4,000 to save by adding a personal account alongside the joint account to open another Edge Saver – though you’ll be doubling the fee to £72 a year.
|Amount saved||Annual Interest||Interest after £72 fee||Effective interest rate|
Two personal and one joint account with four Edge Savers
Or if you really go to town – and pay the fee three times with a joint account and a personal account each you can open up a total of four Edge Savers. Obviously one of these account fees might be covered by cashback.
|Amount saved||Annual Interest||Interest after £108 fee||Effective interest rate|
Watch out for tax on multiple Edge Savers
If you have multiple separate Edge Savers, there’s a risk the rate will reduce again thanks to tax. Don’t forget the tax-free Personal Savings Allowance is only £1,000 or £500, depending on your tax bracket.
That means any earnings over these amounts will be taxed at 20% and 40% respectively. Plus the PSA is only on earnings before the fee.
However, since the joint account interest will be shared 50/50 it means only higher rate tax paying couples with four Edge Savers and the full £16,000 saved will need to worry too much – unless you have savings elsewhere which also contribute to your tax-free allowance.
How does it compare to other savings accounts?
When you compare the headline interest rates it’s a really decent rate, that’s currently well above the rest. Even if you factor in the £36 fee you’ll be beating the rest – as long as you save more than £2,000 in there.
And if you add in extra current accounts to give you access to more Edge Savers you’ll still be looking at above 6.2% on balances up to £16,000.
Plus, remember that 7% rate is only for 12 months. When it drops to 4.5% there are a number of best easy-access accounts that beat it, including Tandem’s 5% easy access account.
Is Santander Edge Saver any good?
You can’t argue with a rate that’s almost 2% higher than the next best paying account. Even if you factor in the monthly fee you’re earning more than elsewhere on balances above £2,000.
Couples could even hack the system to get high rates on more than the £4,000 limit, with the potential to save up to £16,000 if they open up two personal and one joint Edge current accounts.
But I can’t see this as an option for more than 12 months. Unless the rate changes again before the bonus ends you’re better off moving your money after a year.
Santander Edge Saver (7%)
|Account name||Edge Saver|
|Required current account||Santander Edge current account – review here|
|Monthly fee||£3 (on the current account)|
|Interest rate||7% AER (drops to 4.5% after 12 months)|
|Max savings interest paid on||£4,000|
|Multiple accounts||One per person per current account (so you could have two Edge Savers with a joint current account in addition to another with your own Edge current account)|
|Requirements||Must have Santander Edge current account.|
How to get a Santander Edge Saver account
You’ll need to open up the Santander Edge account – here’s my full review. Note this isn’t available to customers with the Edge Up current account.
There’s also the chance to get an extra £10 to £20 cashback when you first apply for the current account (details below).
Quidco & TopCashback: Up to £20 when you open an Edge account
If you apply for the Santander Edge account via cashback sites Quidco or TopCashback there’s often an extra you can earn on top, normally between £10 and £20 (the amount varies).
If you’re not already a customer of either site then make sure you sign up for a welcome offer first, worth up to £17 – though this can’t be used in conjuction with the Santander offer so you’ll need to make a purchase elsewhere first.