Santander published an announcement to all customers with a current account 123.
The bank has raised interest rates as competition between providers intensifies.
The annual deposit interest rate on current 123, Select and Private accounts has risen to 1.75% on balances up to £20,000, from 1.50%, reports The Liverpool Echo.
On Tuesday November 8, the new interest rate should have been automatically applied, allowing customers to now earn up to £347.22 in interest a year, in addition to any cashback they earn on certain household bills paid by direct debit.
The previous rate was 1.50% and has already been increased several times this year.
It had already been reduced several times during years of low interest rates.
Cashback on household bills through the 123 accounts is capped at £5 in each of three different cashback tiers.
Customers can earn 1% cash back on municipal tax bills, mobile and home phone bills, broadband and pay TV packages, and monthly Santander mortgage payments.
They can receive 2% cash back on gas and electricity bills, Santander home insurance premiums and Santander life insurance premiums.
They can also receive 3% cash back on water bills.
There is a £4 monthly charge for accounts and Santander said this will remain unchanged.
Santander said the interest rate on its 123, Select and Private checking accounts is variable and does not follow the Bank of England‘s base rate.
The Bank of England raised the base rate to 3% last week, marking the latest in a series of increases.
Many savings providers have improved their rates in recent months and some current account providers have also increased their money-for-change offers.