Santander Current Account - stay or go?

les_jordan

So, several years ago, my girlfriend and I opened a joint account with Alliance and Leicester as we were moving in together and starting to share bills etc.

We opted for an online-only account as we were attracted to the interest-free overdraft (for the first year) and the high interest rate of 5% AER.

As it happens, my girlfriend ended up studying for her masters, and, long story short, we spent a couple of years permanently overdrawn. The overdraft proved pretty useful in the first year, but less so once the fees kicked in.

Typically, around about the time we might have started to benefit from the high interest rate, Alliance and Leicester were acquired by Santander, and we moved onto a basic rate. We had no real assets at this point, so decided to stick with it and we've never moved.

Now that we've finally reached a point where we always have money in the bank month-on-month, I have been looking at moving some of it into a savings account. It's actually incredibly difficult to find the interest rates and fees associated with our account, but if I have been paid monthly interest of £1.70 on £2,469.89, I think that's 0.06%, which I'm taking to be about 0.8% AER?

Can somebody confirm this for me?

This doesn't strike me as particularly good and, although I could switch to the Santander 123 Current Account which could yield better results (even with the monthly fee), I'm wondering if I should consider switching to a current account with another bank? Obviously, the updating of account numbers and direct debits etc will be a pain.

Any advice here?

ses6jwg

The Premier Direct is what I assume you have now which pays 1% gross aer variable on balances of up to £2,500 which gives you your £1.70 a month.

If you pay direct debits from the account (I assume you do as you mentioned bills) and/ or keep at least £3000 in there it will be worthwhile upgrading to the 123 even with the £2 a month fee. The transfer is hassle free as you retain your existing account numbers and cards.

The only other real competitors out there is the Halifax Reward Account which will pay you £5 per month with no fee, as long as its funded with at least £1000 per month, and the Lloyds TSB Classic Vantage account which pays a tiered rate up to 4%.

Of course, there are all sorts of "added value" accounts out there which come packaged with insurance benefits as well.

innovate

ses6jwg wrote: »

.....the Lloyds TSB Classic Vantage account which pays a tiered rate up to 4%.

Offer expires today (and has practically already expired over a week ago), so it's just max 3% AER now for the Vantage, on balances between £3K and £5K. Nothing above £5K.

I would agree, the Santander 123 sounds the best option, if the cashback from qualifying Direct Debits exceeds £2/mth. Easy to figure out with their calc what the likely net cost/benefit would be.

GlennTheBaker

One thing to bear in mind is that the Premier or Premier Direct Account you currently hold may have free European travel insurance included. If this is of any use then open your new account in addition to the existing one as you will lose the benefit when the Premier Account closes and there is no way to reinstate it.

I opened one of these account many years ago due to the free travel insurance, cashback and a free overdraft. I actually now use it as my main account.

les_jordan

Thanks all for the advice. I think I'll try using the calculator and see if it's worth my while switching to 123. Looks like the most attractive option.

(I hardly ever travel, but did have a trip in Europe recently -wish I'd known about the free travel insurance!)

les_jordan

Okay, quick update. Having used the 123 calculator, I would say that the very least I can expect to earn a month is about £2.30 (before TAX), which is slightly better than what I get now. My only gripe is that I intend on moving money from this account into a savings account or ISA regularly, meaning I could end up with a balance of less than £1000 and, therefore, I could potentially pay my £2 monthly fee and not receive any interest.

I was much more attracted to the Halifax Reward Account with the guaranteed £5 a month and £100 incentive for switching. The switching process (as described) seems straightforward but I want to move my joint account to another joint account and I can only set it up in my own name (and possibly add my partner later - the website is not very clear about this). It's not completely off-putting but enough so to make me stop and think again.

Any further advice or new suggestions? I just can't settle on one option.

ses6jwg

les_jordan wrote: »

Okay, quick update. Having used the 123 calculator, I would say that the very least I can expect to earn a month is about £2.30 (before TAX), which is slightly better than what I get now. My only gripe is that I intend on moving money from this account into a savings account or ISA regularly, meaning I could end up with a balance of less than £1000 and, therefore, I could potentially pay my £2 monthly fee and not receive any interest.

I was much more attracted to the Halifax Reward Account with the guaranteed £5 a month and £100 incentive for switching. The switching process (as described) seems straightforward but I want to move my joint account to another joint account and I can only set it up in my own name (and possibly add my partner later - the website is not very clear about this). It's not completely off-putting but enough so to make me stop and think again.

Any further advice or new suggestions? I just can't settle on one option.

do you not pay any bills from the account? 2.30 seems low if so.

les_jordan

ses6jwg, I do, yes. £130 council tax, £88 electricity and £25 phone/broadband (at present). Assuming the minimum required balance of £1000, that's about £2.30.

System

If all you are saving is £2.30 I suggest you don't bother; remember that the 123 account comes with a fee. The Halifax offer seems better - £100 with £5 on an ongoing basis.

I would suggest you stick with the A&L account or move to Halifax.

les_jordan wrote: »

ses6jwg, I do, yes. £130 council tax, £88 electricity and £25 phone/broadband (at present). Assuming the minimum required balance of £1000, that's about £2.30.

innovate

les_jordan wrote: »

My only gripe is that I intend on moving money from this account into a savings account or ISA regularly, meaning I could end up with a balance of less than £1000 and, therefore, I could potentially pay my £2 monthly fee and not receive any interest.

Based on the figure for your DDs, you will get £43ish a year for the DDs. That leaves you with £19 after the account fees.

les_jordan wrote: »

I just can't settle on one option.

Why not do both? Your £1K just need to be in Halifax on one day each month. You could even pay in (and out) the same, say, £200, 5 times a month.
Plenty of people on here have several current accounts.