UPDATED: Santander 123 to slash interest to 1.5% – should you ditch it?

Gordon_the_Moron · 31 July 2016 at 11:59AM

There is something worth considering now and again if the rate cut happens ...

Is your balance big enough to earn enough interest to match the best paying savings account/ISA/alternative interest bearing current account (if you can be bothered with that) plus £48 a year on top. Ignore the cashback from the equation at this point.

If it isn't, your best option would be to move your savings elsewhere and switch to the 123 lite account. It still pays all the same cashback as the full account.

:money:

Nick_C wrote: »

But in my case the £5 monthly fee is more than covered by the £13 cash back

Nick_C · 31 July 2016 at 1:45PM

In the short term, I will still be using the 123 as an instant access account, even if the rate drop to 2%. We have a couple of accounts paying 3.75%, but these only allow 1 withdrawal a year and we only deposit £500 a month to each (the old YBS regular savers). I'm maxed out on TSB and Club Lloyds.

If I moved to a 123 Lite, I wouldn't be getting any worthwhile interest on cash I need instant access to. We are currently spending quite a lot of cash on home improvements, so my 123 balance is substantial even though I can already get better rates of interest elsewhere.

Maybe a year from now when we've finished with all the home improvements, the 123 Lite might work for me.

Gordon_the_Moron · 1 August 2016 at 4:31PM

I wouldn't be surprised if they do change the top interest rate to 2% if they make it 1% on £1000-£2000 as it is at the moment, 2% on £2000-£20000 (cutting off the top rate) and change the fee to £3 month to keep the 3 element.

Gordon_the_Moron · 1 August 2016 at 4:33PM

Nick_C wrote: »

In the short term, I will still be using the 123 as an instant access account, even if the rate drop to 2%. We have a couple of accounts paying 3.75%, but these only allow 1 withdrawal a year and we only deposit £500 a month to each (the old YBS regular savers). I'm maxed out on TSB and Club Lloyds.

If I moved to a 123 Lite, I wouldn't be getting any worthwhile interest on cash I need instant access to. We are currently spending quite a lot of cash on home improvements, so my 123 balance is substantial even though I can already get better rates of interest elsewhere.

Maybe a year from now when we've finished with all the home improvements, the 123 Lite might work for me.

If you're 123 balance is substantial then it is worth keeping - don't change to lite. All I was getting at is you shouldn't use the cashback you receive as a reason to keep the full account when lite offers it too, all the full account offers that lite doesn't is interest.

chiefnoodle · 3 August 2016 at 12:43PM

The comparison table of Santander 123 at 2% (after £60 fee) to other accounts is seriously flawed to the point of being misleading. You write that for £20,000 1-2-3 will pay you £337, and the next best Club Lloyds at 4% only £197.

However no-one with club lloyds would keep the full £20k in it. They'd put £5k there as no interest is paid on more than that. The remainder would then be in a normal easy access savings a/c, for which you can get 1.3%.

This adds up to 4%x£5,000 + 1.3%x£15,000 = £200 + £195 = £395 - more than £337

Hence you're better off putting £5k in lloyds and the remainder in another savings account (or in a 123 account)

Dawei · 3 August 2016 at 12:56PM

Any suggestions please? I receive about GBP620 monthly into my UK bank account, which only has only one DD each month out. There is now about GBP8000 in the account, which is paying virtually zero interest (RBS). I live in Asia, and would transfer it over here for a better rate, but after Brexit, with the devaluation of the pound, I would effectively lose 20% of it! Where can I get the best rate in my situation? I seem to be stuck in no man's land and it hurts badly!

Carleton · 3 August 2016 at 4:00PM

If you have £20,000, then how about £5,000 in Lloyds yielding £197 and £15,000 in Santander yielding approximately £187. This is approximately £384 in total, nearly £50 more than keeping it all in Santander.

Nick_C · 3 August 2016 at 4:33PM

I think you will have trouble opening a new UK current account if you are not living in the UK

jimbo49 · 3 August 2016 at 5:22PM

i think what Santander is (probably) going to do is right out of order! i know that companies of all sorts have to make a profit but Santander has already increased it's fees by 150%, from £2/mth to £5/mth, which increased the money made by a considerable amount, now to drop the interest rate by a full 1% is literally taking the p**s! and dont let them or the other banks/building societies make out that they have to do this because they are not making a profit! this is being done purely and simply through greed! the next thing they'll be moaning because so many customers have left and gone to another 'bank' that thinks a bit more highly of it's customers and customer loyalty!!

dcweather · 3 August 2016 at 5:36PM

I predicted this on here six months ago. Not based on Brexit or a drop in interest rates but on the fact that the UK tax changes to savings effectively made the rate go up by 0.6%. So if it dropped to 2.4% it would be the same as it always was before April. Banks will never miss a trick!

UPDATED: Santander 123 to slash interest to 1.5% – should you ditch it?

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