Check your interest rates on Santander savings accounts

Santander's acquisition of the Alliance & Leicester and Abbey National building societies meant that they are now responsible for millions of Britons' savings. It might be a good time to check the interest rates on your savings accounts to make sure you are getting a good deal.

Santander (santander.co.uk) offers a range of savings accounts, from instant access savings accounts to fixed-term savings bonds, where your money is tied up for the duration of the bond.

The Instant Access eSaver offers interest rates of 3.10% gross. This looks attractive, but bear in mind that this includes a bonus rate of 2.60% for the first 12 months. After a year you have to look sharp and switch accounts or your savings will slump into the 0.50% realm. This is the classic "suck and slap" gambit. Banks suck you in with an attractive rate, and then slap the rate down. Santander are not the only offenders, but don't fall for it.

The 3 Year Fixed Savings Bond offers another tempting rate of 4%. Look closer and you note that this is only for balances of more than £25,000. If you have between £5,000 and £25,000, your savings will earn 3.50%. That still looks pretty good, but it assumes that interest rates are going to stay pretty low for the next 3 years. If they start to soar in, say, 2013, then your cash will still be tied up in what will look like a mediocre deal by then.

This is a common dilemma facing savers. Interest rates on savings accounts remain low at present, but when they eventually rise, you want to be in a position to switch accounts quickly and take advantage.

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