Banking giant Santander has texted customers with some bad news which will affect everyone with savings.

The Spanish bank launched a best-in-class easy access savings account last autumn with a bumper 5.20 percent savings rate.

But this week Santander has texted customers with a warning that it is slashing the rate on Easy Access Saver Limited Edition accounts from 5.20 percent to 4.20 percent AER.

The text said: “The interest rate on your Easy Access Saver Limited (Edition 3) will reduce from 5.20 percent AER/gross (variable) to 4.20 percent AER/gross (variable) on 20 May 2024.”

It comes after the bank wrote to customers earlier this year to set out that it would make the change in May.

It’s able to do so because the account is a variable rate account, so always subject to change.

The slashed rate means that customers maxing out the account’s value will lose £200 in interest that they would have otherwise gained over the course of a year.

The Personal Savings Allowance means those who are basic rate taxpayers can earn £1,000 in savings interest before paying income tax on it in a given financial year.

If you had £20,000 in a Santander savings account, this would give you £1,000 in interest over the year, maxing out your savings earnings without paying tax, and many customers will have been doing just that.

But with a 1 percent cut to the rate, you will now only earn £800 on the same amount, a £200 loss.

Money guru Martin Lewis says customers can get a better rate – so if you find one, simply ‘move your money elsewhere’.

He said via his Money Saving Expert website: “For most of the past few months it’s been higher than any other easy-access account rate – and the big advantage of choosing variable easy-access accounts like this is that, if they do let you down and ditch the very high rate, you can ditch them just as quickly and switch elsewhere.

“And even though the new rate is far from awful, it’s beatable, so why not move your money elsewhere.”