A year ago Santander 123 halved its interest to 1.5% – now most should consider ditch

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  • HUMBUG
    HUMBUG Posts: 339
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    All those regular saver accounts like HSBC and Nationwide have conditions attached such as :
    HSBC - You must have a Premium or Advance Account
    Nationwide - You must have a current account

    You probably have to pay a minimum amount in to open these other mandatory accounts or have standing orders between other bank accounts to meet those conditions . It is getting very fiddly to manage lots of bank accounts so nothing is stress free trying to maximise interest on savings (seems like I am spending a great deal of my retirement time doing this rather than doing other fun stuff).

    Is it easy to close the 123 account and have the direct debits transferred to another existing current account? What about standing orders? Do they get transferred too ?
  • I highly doubt many will still after now be bothered to switch just because of this
  • gilly56
    gilly56 Posts: 85
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    edited 13 December 2017 at 5:10PM
    @HUMBUG
    If you just downgraded your 123 account to the 123-Lite account instead then I think everything stays the same including account number and you'd continue to receive cash-back on utilities as usual. I'm thinking of doing this soon.
  • HUMBUG
    HUMBUG Posts: 339
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    gilly56 wrote: »
    @HUMBUG
    If you just downgraded your 123 account to the 123-Lite account instead then I think everything stays the same including account number and you'd continue to receive cash-back on utilities as usual. I'm thinking of doing this soon.

    Yes , I think I might do the same as the £5 per month charge seems quite high and my cashback is only about £30 a year.
  • intalex
    intalex Posts: 811
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    Doing some calcs if you are a 40% tax payer then I make the gross interest on £20k in a standard 123 current account at 1.09% vs downgrading to lite (assuming cashback covers the £1 monthly fee).

    This is effectively based on the fact that the £4 extra monthly fee (£48 per year) cannot be used to offset any interest earned for tax calculation purposes, which means you gross it up (divide by 0.6) to arrive at a fixed £80 per year reduction in gross interest regardless of the balance.

    This leads to an effective gross interest rate of 1.09% for a £20k balance, reducing to 0.96% for a £15k balance.

    Hope someone can confirm the calculations and this proves helpful to others.
  • gilly56
    gilly56 Posts: 85
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    I finally got around to downgrading to the 123 Lite account today. Could not be done via the secure messaging, was told it would need to be done over phone or in a branch. Must have waited nearly an hour to get them on phone and they have to go over all the spiel as if you were opening a new account. However all is sorted now, my account number and sort code remains the same. All my DDs and payees, etc stay the exact same and I will get the usual cash-back (which in my case is not a lot but it will more than cover the £1 monthly fee).
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