Most of us have suffered paltry rates on our current accounts for the past few years. So the news that Santander is spicing up the current account market with a juicy market-busting in-credit interest rate of 5 per cent offer on balances up to £2,500 is very welcome.
It's a no-brainer to move to this account and it is likely to be popular so make sure you get in quick before it closes (the offer is limited any may be withdrawn at any time). The added incentive is a £100 bonus for switching.
I have my own current account with Halifax's Reward Current Account, which pays £5 each month you pay in £1,000 (the equivalent of 0.5 per cent), but I'll definitely be switching to the Santander deal.
If I maintain a balance of £2,500 I will receive £125 gross interest a year (just over £10 a month) plus the £100 bonus - much better than a measely five quid.
However, if you have a higher balance in your current account, Lloyds TSB's Vantage account may still be a better option than Santander as it offers 4 per cent interest on balances between £5,000 and £7,000, if you credit £1,000 a month.
A downside of the Santander deal is that it is a fixed rate for a year so you have to watch what happens when the term is up and be prepared to move your money again for a better rate. The £100 cash bonus will be paid into your new account within three months of the account opening providing you have at least one active direct debit set up on the account within 11 weeks and have paid in at least £1,000 a month.
The Santander offer is available on four current accounts. Two of these are premium accounts for which you pay a fee in return for extra benefits. The 'Zero' account offers no fees if you exceed your agreed overdraft, while the 'Preferred In Credit Rate' account offers a four-month interest-free overdraft when customers switch.
If you switch, you can expect to match your existing overdraft facility up to £5,000.
The £100 offer is also available to business banking customers who switch to the business current account and whose company has an annual turnover of no more than £1 million.