Festgeld

Introduction

The fixed-term deposit from Santander is a classic term deposit with a rate fixed for the entire term. It is aimed at savers who want to invest a larger sum for a defined period and expect a guaranteed, predictable rate in return - without the price-fluctuation risk of securities.

Interest Rate

For a 12-month term and a deposit from €2,500, Santander's current offer page states an interest rate of 2.25% p.a. This current figure differs from the rate of 1.95% p.a. last recorded in the product database; since both refer to the same combination of term and minimum deposit, and the offer page reflects the more current state, this review uses the 2.25% p.a. rate. According to the bank, the rate is guaranteed: the condition valid on the day the deposit is opened applies for the entire term, ruling out any later reduction.

Santander also tiers the rate by term. For context: 6 months carries 2.00% p.a., 2 years also 2.25% p.a., 3 years 2.35% p.a., 4 years the highest figure of 2.50% p.a., and terms of 5 to 8 years return to 2.25% p.a. Anyone seeking a higher return should therefore not automatically stick with the 12-month term but specifically consider the 3- or 4-year option.

Deposit and Terms

The minimum deposit is €2,500; according to the provider there is no fixed upper limit ("the investment amount is not capped"). Opening the account requires a free Santander flexible savings account as a reference account, through which both the deposit and the payout at the end of the term are handled. A reference account at another bank is not accepted - anyone without an existing Santander account must therefore open this savings account first, before the fixed-term deposit can be set up.

Who It Suits

Santander's fixed-term deposit is aimed primarily at savers who already have a larger, spare capital cushion from €2,500 and are willing to first open a separate flexible savings account with Santander for it. Those who want to stay flexible can start with the 6-month term's shorter commitment, while savers aiming for maximum return should specifically pick the 4-year term. Since all terms run through the same reference account, part of the capital can also be placed in a shorter term and another part in a longer one if needed, combining flexibility with return.

Pros and Cons

• Guaranteed rate, fixed for the entire term
• No upper limit on the deposit amount
• Tiered offer with several terms available, from 6 months to 8 years

• Minimum deposit of €2,500 required, less suitable for smaller savers
• A free Santander reference savings account is mandatory
• The best rate (2.50% p.a.) only applies at a 4-year term, not the standard 12-month term

Verdict

Santander's fixed-term deposit stands out for its guaranteed rate and flexibility in choosing the term, but in return requires its own Santander reference account and a minimum deposit of €2,500. For the 12-month term, the current rate is 2.25% p.a. - savers willing to commit for longer get the highest rate in the range, 2.50% p.a., at a 4-year term.