Banks do battle over top online rates for savers.(Business)

AN INTEREST rate battle has broken out between banks and building societies trying to woo savers with top internet accounts.

Santander has pushed the rate on its eSaver Issue 3 up to 2.4pc (3pc) including a first year bonus of 2 (2.5) percentage points.

It paid 2.32 pc (2.9 pc) when launched last month. But within weeks competition forced it to improve the rate. Savers who have already opened version 3 of the account will benefit from the new rate. There is no restriction on the number of withdrawals that you can make.

Nationwide Building Society has raised the rate of its MySave Online Plus account to 2.41 pc (3.01 pc) including a 1.2 (1.5 pc) bonus payable for the first year. But it limits the number of free withdrawals to just one a year.

This is the second time in a few weeks the building society has raised the rate. savers who have opened an account since February 18 -- the date of the last rate rise -- will benefit from the increase. But if you opened an account between December 10 last year and February 17, you earn a lower 2.2 pc (2.75 pc)

If you are in an older version of Santander eSaver, your money could be attracting interest at a pathetic 0.08 pc (0.1 pc)

Both Santander and Nationwide raised their rates following the launch of the West Bromwich Building Society WeBSave Easy Access account last week. It pays 2.4 pc (3 pc) including a 1.6 (2) percentage point bonus until March 31 next year.

sy.morris@dailymail.co.uk