Santander reward account - can interest pay the fee? benefits for free??

joeyjoejoe_2

Hi,

I have a santander current account, but a recent need to sort some breakdown cover has got me thinking.
I dont normally see the benefit in paid bank accounts, but santander reward account costs £10 with 5% interest, so, if i have £200 in my account each month - i should earn £10 interest on it (ignoring tax deducted), therefore getting all the benefits for 'free'?

is this right?

thanks in advance

Venusflytrap

Does the bank account cost £10 per month or per year to run???

I think your calc is unrealistically optimistic! The 5% interest is per annum not per month (which would equate to 60% if so - impossible!). So £200 credit per month will earn 0.00416% interest which will earn you, wait for it...£0.83p monthly.

If the account costs £10 per year to run then this will make sense but I am certain it is more like £10 per month.

jen245

Its £10 per month, and the 5% is the annual rate, not what you'd be paid in interest monthly, so no you wont get £10 for having £200 in your account!

scottishblondie

I'm afraid £200 is only going to make you around 81p in interest each month, and that's before tax. Now if you keep the maximum £2500 in there all the time you will make around £10 a month in pre-tax interest, but to be honest you're probably better off just buying breakdown cover. Mine cost £35 last year.

joeyjoejoe_2

Thanks for all the help,

I knew something wasnt right - at least now i understand AER!

cheers