'Does the Santander 123′s 3% interest beat the top cash Isa?' blog discussion

Former_MSE_Helen · 11 March 2014 at 4:49PM

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Does the Santander 123′s 3% interest beat the top cash Isa?" Blog.

Please click 'post reply' to discuss below.

VT82 · 11 March 2014 at 6:12PM

I think the foot note about the £2 per month fee should be a bit more prominent. For a £3k balance, the 3% gross is more like (a much less competitive) 2% gross because of the fee.

Yes you can get cashback, but if you're going to assume that people are going to do that, you're out of the realms of treating it as a pure savings account, which is what the article is obviously doing.

If you're talking balances of £12k+ I think it's OK to treat the fee as immaterial.

grumpycrab · 12 March 2014 at 11:03AM

I'm not sure the 123 should be compared with a cash ISA. It depends on how much cash you have. For a current account 123 is great (subject to the £2 fee mentioned above; but this is quite easy to offset against direct debit interest which the 123 account gives.)

At the other end of the scale - have both! And its also worth pointing out that you can have two 123 accounts (**) providing 3% (before tax) on upto 40K.

(**) on a joint account.

old_grouser · 12 March 2014 at 2:32PM

For those in a position to do this, Santander will let you open more than one 1-2-3 account, and Lloyds vantage limits you to three current accounts. So that's nominally £55000 @ 3% gross available.
OG

Herbalus · 12 March 2014 at 8:00PM

old_grouser wrote: »

For those in a position to do this, Santander will let you open more than one 1-2-3 account, and Lloyds vantage limits you to three current accounts. So that's nominally £55000 @ 3% gross available.
OG

Don't forget the Nationwide with £2500 at 5%, the TSB Enhance for £15000 at 3% (though closing at the end of the month like Lloyds Vantage), and BoS which does the same.

That's £85,000 at 3% and £2500 at 5%.

MeToo · 12 March 2014 at 9:06PM

Our just completed switch to Santander, opening an 'our' and 'her' account, leaves me with the option to also open a 'me' account with a third £20k at 3%, provided those in-out criteria are fulfilled.
Even if the DDs' paybacks are negligible and the account charge of £24pa is made 2.4%net on that £20K, ie £480, leaves £456 .. or 2.28%net for instant access of capital available between £3001 and up to £20K.
C'est un pas de cerveau-er, as they'd say Mid Channel.

jimjames · 12 March 2014 at 10:16PM

Herbalus wrote: »

Don't forget the Nationwide with £2500 at 5%, the TSB Enhance for £15000 at 3% (though closing at the end of the month like Lloyds Vantage), and BoS which does the same.

That's £85,000 at 3% and £2500 at 5%.

Shame so many articles seem to miss the Nationwide option. There is also now TSB at 5% too so the article is already out of date.

Totally pointless having a cash ISA in my view when so much better rates are available outside. All mine goes into the S&S ISA anyway.

Plumpton · 14 March 2014 at 10:51AM

Santander currently offer the best rates around. As i have moved previous years ISAs to them I find myself in danger of breaching the £85,000 protected sum. The question is should I breach the limit to take account of the good rates or play safe and put money elsewhere at lower rates...is Santander too big to fail?

cazna · 14 March 2014 at 11:13AM

I recently had a consultation in local Santander office about my ISA which is shortly due to mature. Yeah! they went on about 123 account. My husband is very sceptical about it and about Santander. However, I took it in and my thought was that I wouldn't be able to do the £500 a month as required. The DD were easy - pay off my credit cards. I was told you can get a standing order from another bank to pay in £500 each month and then one in Santander to pay it back into the other bank - a sort of circular £500. This sounds dodgy!! They assured me it was legal as long as the £500 is from and to a different institution other than Santander. You cannot pop money from any other Santander account back and forth to the 123. Still seems suss to me.

Herbalus · 14 March 2014 at 11:25AM

cazna wrote: »

I was told you can get a standing order from another bank to pay in £500 each month and then one in Santander to pay it back into the other bank - a sort of circular £500. This sounds dodgy!! They assured me it was legal as long as the £500 is from and to a different institution other than Santander. You cannot pop money from any other Santander account back and forth to the 123. Still seems suss to me.

Why would it be illegal or dodgy?

You're transferring £500 from one of your accounts to another, and then transferring it back. There's nothing illegal about that. I do it regularly.

In fact, I have a Lloyds Vantage and a Santander 123 account, and I have a standing order for £1000 from Santander to Lloyds every month, and a standing order for the same day to transfer it back.

Bronniedog · 14 March 2014 at 4:06PM

I also have a 'rotating' line of payments between Lloyds and Santander. It works a treat. I note the comment about the Lloyds' Vantage ending at the end of the month. I can't find any other details about it ending. Can anyone throw further light on this please?

'Does the Santander 123′s 3% interest beat the top cash Isa?' blog discussion

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