The rate only remains at 6% for a year, after which it drops to 4.5%. It's also only payable on balances up to £4,000, with any savings over that amount earning nothing at all. Plus, you'll need a Santander current account to open it.
Accounts like this with 'boosted' introductory rates may appear tempting, but are they worth the hassle? We weigh up the pros and cons.
Rates on boosted savings accounts
A boosted savings account offers a higher interest rate for a set period of time. These deals are usually variable-rate instant-access accounts.
The table below shows the highest rates currently available, and the conditions they come with.
Find out more: .The problems with boosted rates
As the table shows, boosted rate savings accounts offer very attractive initial returns.
Santander, Chase and Sidekick lead the pack, with deals that are well above the February average of 2.9%.
But before you rush to open one of these accounts, you'll need to factor in the following:
1. Bonuses are fleeting
The boosted rate only lasts for a set period of time and will be limited to new customers only. While many accounts offer the boost for a year, some of the best rates vanish after just six months.
If you don't pay attention and switch as soon as the introductory offer ends, you could find yourself earning a much lower rate than you'd get on a different account.
2. Rates can still change
The overall rate you get on your boosted saver isn't set in stone. It could still go up or down before the bonus is due to end.
That's because rates on instant-access accounts are variable and the provider can change it whenever it wants.
For example, the BoE most recently cut the base rate from 4.75% to 4.5% on 6 February. In response, Chase reduced the rate on its instant-access saver by the same amount, meaning its standard rate went from 3.5% AER to 3.25%.
Although the boosted rate of 1.5% stayed the same, the overall interest payable dropped from 5% AER to 4.75%.
3. Some deals come with restrictions
Some of the providers offering boosted rates require you to jump through hoops to open an account. Both Chase and Santander require you to be a current account customer first. In the case of Santander, there's also a monthly fee of £3 to hold an Edge current account.
Principality and Chip place limits on the number of withdrawals you can make throughout the year, so these deals aren't great if you think you might need to dip into your savings regularly.
You should also watch out for rules on balances. As mentioned earlier, the Santander Edge Saver only pays interest on up to £4,000. If you have a big lump sum to invest, you might want to take your money elsewhere.
Find out more: .Are you better off with a standard rate?
Aside from Santander's 6% boosted deal, there isn't a huge difference between the top boosted rates and the best standard savings rates.
With this in mind, boosted deals are best for those who are willing to move their savings regularly to get the very best deal.
The top instant-access rate currently available is 4.85% from Coventry Building Society, although this deal has opening restrictions and withdrawal limits.
If you're looking for a deal with no restrictions, there are lots of options around the 4.5% mark, as shown in the table below.
Shop around for the best account
When working out the best home for your savings, make sure you compare accounts from different banks.
Our reviews also show how banks and building societies measure up for customer service, and reveal those that have met our criteria to become a Which? Recommended Provider.
source https://www.which.co.uk/news/article/should-you-choose-a-savings-account-that-offers-a-boosted-rate-asvnO0f5xhKw