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Santander cashback account could net customers £400 in a year – but there’s a catch

Santander has launched a new current account that could offer switchers almost £400 in cashback and interest during the first year. 

The bank has unveiled its new Santander Edge account alongside an exclusive easy-access linked savings account.

The current account is offering cashback on both debit card spending and direct debits, with up to £20 per month available, although there is a £3 monthly account charge. 

Santander has unveiled Santander Edge, a new current account and exclusive easy-access linked savings deal, which offers up to £400 cashback

Meanwhile its linked savings account is offering customers 4 per cent interest on balances up to £4,000.

Someone maintaining the maximum balance in this account will earn £13.10 each month.

It’s worth noting that the 4 per cent interest rate includes a 0.5 per cent bonus rate for the first 12 months from opening.

The new bank account is effectively replacing Santander’s 1|2|3 Lite current account, which has been removed from sale today. 

However, existing 1|2|3 Lite customers can continue to use their account as usual. 

There will be no impact on the popular 1|2|3 Current Account or any other Santander current account. 

The new Santander Edge account and exclusive Edge saver can be opened either in branch or online. 

>> Check the best savings rates using This is Money’s independent tables 

How the Santander Edge cashback scheme works

There is 1 per cent cashback on essential grocery shopping and transport-based debit card spending. This is capped at £10 a month.

There is a further 1 per cent cashback on household bills paid via direct debit covering council tax, gas and electricity, mobile, landline, broadband and paid-for TV packages. Once again, this is capped at £10 a month.

To earn the £10 cashback, customers will need to spend £1,000 a month in each category.

The £3 monthly charge is unavoidable so potential joiners will have to factor this in.

Categories: The cashback on Santander Edge is limited to transport, groceries and household bills and capped at £20 a month

Categories: The cashback on Santander Edge is limited to transport, groceries and household bills and capped at £20 a month

In order to benefit, this account will therefore need to be used as a main bank account. Customers would be wise to check their monthly outgoings to check what cashback they will likely be on track to receive. 

To be eligible for the Santander Edge current account, customers need to have a minimum of £500 credited into their account every month and at least two active direct debits.  

Enrique Alvarez, chief customer officer at Santander UK said: ‘We’re excited to be able to unveil Santander Edge, designed around what we know our customers want from their bank. 

‘We’ve created a new account to help customers make the most of their money today and save for a better tomorrow. 

‘Building on our focus on cashback, we will be rewarding them for their essential spending, whether that’s the weekly supermarket shop or travelling to work, and their household bills – particularly relevant given current pressures. 

‘The exclusive saver also provides a preferential rate for people looking to earn interest on their easy-access savings. 

‘Added to this, we’ve enhanced our app, with more in-app benefits being rolled out over the coming months.’

How does it compare?

Santander isn’t the only bank with a decent cashback deal at the moment. 

Those specifically looking for cashback options might prefer the fee free digital bank, Chase, part of US giant JP Morgan.

Perhaps most notably, Chase is offering 1 per cent cashback on all spending for the first 12 months.

This is more generous than most cashback credit cards – albeit only for 12 months and with certain exceptions.

It means that someone spending £24,000 on the card in their first year could receive up £240 in cashback.

This is the same amount of expenditure that would be required on Santander’s new account, however without the category constraints or the £3 monthly charge.

Do your sums: People weighing up Santander's latest offer may find that other deals make financial sense

Do your sums: People weighing up Santander’s latest offer may find that other deals make financial sense

Another option for those who are tempted by Santander’s offer is to consider some of the generous switching offers currently available. 

For example, HSBC and Nationwide are both offering cash incentives to new current account customers, offering them a £200 bonus for switching.

Those opting for the HSBC Advance account will just need to do so using the Current Account Switch Service (CASS) and set up at least two direct debits or standing orders.

Joiners will also need to deposit at least £1,500 into the new account within 60 days of opening it.

As for Nationwide’s offer, customers must complete a full switch using CASS and a minimum of two active direct debits must be transferred to the new account. 

As well as the £200 freebie, both providers are also offering their customers access to some exclusive savings deals, similar to Santander.

HSBC’s Online Bonus Saver account is essentially an easy-access deal paying 3 per cent on balances up to £10,000, exclusive to HSBC banking customers.

Someone depositing £10,000 in HSBC’s account could expect to earn £300 in interest after one year, though the interest rate could be changed again in the future.

The drawback is the fact that the 3 per cent rate only applies for any month in which no withdrawals are made. During a month in which a withdrawal is made or the account is closed, savers will only earn 0.5 per cent.  

Nationwide offers in credit interest of 5 per cent on balances up to £1,500 held within the Nationwide Flex account enabling new joiners to secure up to £75 in the first year from interest.

Old and new: How Santander's new Edge current account compares to the 1|2|3 Lite account

Old and new: How Santander’s new Edge current account compares to the 1|2|3 Lite account

THIS IS MONEY’S FIVE OF THE BEST CURRENT ACCOUNTS

Chase Bank will pay £1% cashback on spending for the first 12 months. Customers also get access to an easy-access linked savings account paying 1.5% on balances up to £250,000. The account is completely free to set up and is entirely app based. Also no charges when using the card abroad.

Lloyds Bank

The Club Lloyds account offers £150 free cash when you switch. It also pays 0.6% on balances up to £4,000, and 1.5% on £4,000 – £5,000. There is a £3 monthly account fee to pay. But this is waived each month that you pay in £1,500 or more.

Natwest

HSBC’s Advance Account pays £200 when you switch. You just need to set up two direct debits and deposit £1,500 in the account within 60 days of opening it.

Santander

First Direct will give newcomers £175 when they switch their account. It also offers a £250 interest-free overdraft. Customers must pay in at least £1,000 within three months of opening the account.

Nationwide

Nationwide’s FlexDirect account comes with up to £200 cash incentive for new and existing customers. Plus 5% interest on up to £1,500 – the highest interest rate on any current account – if you pay in at least £1,000 each month, plus a fee-free overdraft. Both the latter perks last for a year.

Barclays

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