Santander recently launched its new Edge current account as a replacement for the popular Lite 123. In this article I’ll explain how this new account works, and also take a look at how it compares to the updated Barclay’s Blue Rewards scheme and others.
What is the Santander Edge current account?
Edge is a new cashback current account from Santander that replaces the Santander 123 Lite current account.
Edge account holders will befit from 1% cashback on debit card spending and bills but there are limitations. Cashback is capped at a £10 a month for both types of spending, meaning the maximum you could earn is £20 a month or £240 a year.
In addition to the cashback, the account allows access to the Edge saver, which offers 4% interest on balances up to £4,000, though this does drop to 3.5% after 12 months.
How much does the Santander Edge account cost?
Like many rewards account, Santander’s Edge isn’t free. The Lite 123 account previously attracted a £2 a month fee. Edge costs £3 a month, or £36 over a year.
That compares well with Halifax’s £3 a month and NatWest’s £2 a month account fee. Barclays Blue Rewards costs £5 a month, but you get this money back. Halifax also waives its monthly fee if you meet its minimum deposit criteria. With Santander Edge there is no way to avoid the fee, so that needs to be taken into account when assessing the total return on the account.
Who is eligible for a Santander Edge account?
The Santander Edge account is available to UK residents over the age of 18. There’s a minimum deposit requirement of £500, though you could transfer this out again immediately, and at least two active direct debits need to be setup on the account.
You can open an account in branch if you prefer, but it’s quicker and easier to apply online.
Santander Edge current bank account benefits and fees in a nutshell.
- 1% cashback on debit card spending (up to £10 a month)
- 1% cashback on bills paid via direct debit (up to £10 a month)
- Linked 4% Santander Edge Saver account on balances up to £4,000
- No fees when using Santander ATMs abroad
- £3 monthly account fee
- £500 minimum monthly deposit
- 2 active direct debits required
Santander Edge debit card cashback
Cashback on debit card spending is restricted mainly to supermarket spending and travel, as categorised by Santander. This means that you benefit from cashback on things like petrol and diesel form Supermarket petrol stations, due to their classification as supermarkets, but in other instances, might not receive cashback at all even though your spending was in a valid category. For example an incorrectly identified EV charging point, or boutique supermarket.
The categories listed for cashback are:
- Supermarkets
- Trains
- Buses
- Electric vehicle charging
- Petrol and diesel
Supermarkets where you can earn cashback on purchases and fuel include:
- Aldi
- Asda
- Co-op
- Costcutter
- Iceland
- Lidl
- Marks and Spencer
- Morrisons
- Ocado
- Sainsburys
- Spar
- Tesco
- Waitrose
In addition to supermarket petrol stations, cashback can also be earned at:
- Applegreen
- BP
- Esso
- Gridserve
- Maxol
- Tesla
- Texaco
- Shell
Cashback can also be earned on travel and ticked purchases from all major rail operators and ticket resellers including:
- East Midlands Trains
- Greater Anglia
- National Express
- NCP
- New Southern Railway
- Scotrail
- TfL
- Trainline.com
- West Cost Train
- Uber
All domestic and international flights are excluded, as a tickets and Oyster Card top ups from newsagents.
Cashback on household bills
When is comes earning cashback on bills, things are a little easier. Only bills paid by direct debit are covered, but these can include:
- Council tax
- Phone and broadband bills
- TV packages
- Gas and electricity bills
- Water bills
TV licences aren’t covered, nor is LPG or Calor Gas, or maintenance contracts. It’s not clear yet how Santander will treat heating oil. I suspect many of the smaller resellers won’t be covered.
How much will you really earn from the cashback?
This is always going to be dependent on your spending, but at 1% you’d need to spend £1,000 on qualifying bills, and debit card expenditure in order to get the maximum £10 in each category.
For those that commute, and/or use their car a lot, the £10 debit card cashback might be achievable. Especially if your also supermarket shopping for a large family. For others £5 looks more achievable.
It’s a similar story when it comes to household expenditure. Those who pay the most will get the most back, but money savvy households will likely already be on the cheapest phone tariffs, TV packages etc… and also energy prices are high, for most it won’t push them into the £1,000 a month territory. As such I’d guestimate a further £3.50-£5 a month to made here.
How does the Santander Edge account cashback compare?
That would bring the average household to £8.50-£10 a month cashback. Once you subtract the £3 monthly account fee though, you’d be down to £5 or £7 a month. That may leave many questioning if the account is even worth it.
vs Chase
Chase Bank (as we’ve previously reviewed) offers 1% cashback across a much wide range of spending (including travel abroad), is easier to open, and doesn’t have any account fees. It’s cashback only lasts for 12 months, but we’re likely to see a new incentive once it ends.
Vs Santander Lite 123
Despite the Lite 123 account being closed to new customers, those who current hold an account can still benefit from its more generous cashback. The Lite account is £2 a month and offers 3% cashback on water bills, 2% on gas and electricity bills.
Cashback is capped at £5 a month for each bill category, and a maximum £15 a month over all.
This offers better value than the Edge account, so if you already have a Lite 123 account, I would recommend sticking with it over switching to the Edge account unless you need access to the Edge saver (more on that below).
Santander Edge saver – a 4% savings account
Edge current account holder are able to open a Santander Edge saver. This a 4% savings account that includes a 0.5% bonus for the first year. After that is drops to 3.5%, though its variable, so could rise in the future if the Bank England raises the base rate (as is expected).
The interest is payable on balances up to £4,000. Funds above this amount will receive nothing at all, and would be best placed elsewhere.
Whilst you are only allowed one Edge saver per Edge account, if you have both a personal current account and a joint account, you can open two Edge savers and enjoy interest on £8,000 spread across the two accounts, or £16,000 for a couple. The main Edge account fee though might be prohibitive here though.
How much can you earn?
If you maxed out with the account with £4,000 for a full year, you’d earn £160 interest in the first year, and £145.6 in the second year when the rate drops to 3.5%.
This assumes that you are earning enough cashback in order to cover the monthly Edge account fee.
The fee totals £36, and if not accounted for elsewhere effectively lowers your interest rate to 3.10% on a full £4,000 Edge saver balance, and just 2.2% on a balance of £2,000.
Santander Edge saver vs Barclays Rainy Day saver
Just like Barclays Blue Rewards scheme, this savings account is the main reason to open to an Edge account.
Unfortunately for Santander, Barclays Rainy Day saver, wins out against the Edge saver with its market leading rate of 5.12% on balances up to £5,000.
On the same £4,000 principle, the Rainy Day saver would net you £204.8 in interest, and could be maxed out, to bring in £256 in interest over the first year. And whilst you need to pay a £5 for Blue Rewards to gain access to the Rainy Day saver, this £5 is returned to you when meeting similar criteria as required on the Edge account.
Is the Santander Edge account any good?
On the surface the Edge account looks great. 1% cashback, and a 4% savings account is nothing to be sniffed at. Yet dig a little deeper and it soon becomes apparent that it’s neither the best account for day to day spending or savings.
The cashback restrictions mean it falls behind account such as Chase, which offers 1% cashback but on a massively wider range of spending. Even the cashback on household bills is beaten by its own (now discontinued) Lite 123 account.
Yes, in theory you could earn a net £204 (once the fee is taken into account) by maximising the cashback, but in reality, most won’t get anywhere near that. In fact, many households would be lucky to get half of that amount, and as such would stand to earn more from account switching incentives. Halifax for instance is now offering £175 switching bonus for new Rewards account holders, which could see you earn a total of £235 over the year (though you’d need to deposit £1,500 a month to have the monthly account fee waived).
The headline saving rate of 4% is up there with the best in the market at the moment, and is variable, so should increase in line with the BoE base rate. That being said, it’s still below the 5.12% of the Barclay’s Rainy Day saver account, and the maximum interest earning balance also falls short of the competition. To add insult to injury, unless you can cover the account fee from cashback (which should be possible for most), your effective interest rate could be even less.
