Santander123 As A Savings Account?

daveoc22

Given the low rates on easy access accounts I've been thinking of converting our Santander current account to a 123 account.

As I understand it we can get interest of 3%, paid monthly, on credit balance up to £20000, with a £2 a month charge.3% seems pretty good at the moment.

The only problem is we don't use this account for direct debits and I think you are supposed to have two direct debits set up on it.

Anyone any experience of opening one without having any direct debits?.

Gromitt

You can use a savings account for direct debits. For example, if you open a Tesco internet saver and a Tesco instant access saver, you can transfer £1/month to them and satisfy the requirement. One a year, you can transfer that £24 back to your current account (or sooner if you want).

You will need to pass £500/month through the account to get the interest.

Cass85

You must have at least 2 direct debits and £500 credited each month to qualify.

Otherwise youre paying £2 a month and wont get interest.

Also remember as it is a bank account a credit search is carried out.

Gromitt

Cass85 wrote: »

You must have at least 2 direct debits and £500 credited each month to qualify.

Otherwise youre paying £2 a month and wont get interest.

Also remember as it is a bank account a credit search is carried out.

You forgot the "Minimum £1000" qualifier and it's basically the same post as I made 3 hours ago

Cass85

Gromitt wrote: »

You forgot the "Minimum £1000" qualifier and it's basically the same post as I made 3 hours ago

Ah im full of assumptions today. I assumed if you were putting savings in there you were putting the £20k in.

notbritishgas

Yes OP I am thinking of doing the same.
I have a Premier direct current account and an esaver 4 that has just reverted to 0.5% interest!
If I convert my CA to a 123 account and move £15000 into it from the esaver together with the DD's in there and the balance of about £2500 I would get about£515 annually.

I am hesitating because I wonder about Sanatander's motives, are they trying to get people onto a fee paying account and then gradually reduce the rewards or increase the fee. I know I could change banks if they do that but really do not want the hassle of changing 13 DD's.

I have just opened a Nationwide account paying 2.6% (mainly for the esaver4 cash) so would only gain 0.4%.

psychic_teabag

daveoc22 wrote: »

The only problem is we don't use this account for direct debits and I think you are supposed to have two direct debits set up on it.

Any particular reason not to move the "best" D/Ds over to get the cashback. For me, cashback from fuel plus water D/D's cover the fee between them, and the cashback from council tax is just about the same again. So even if you don't want to move all your D/Ds, just picking a couple of good'uns could satisfy the account conditions and the fee.

badger09

Strumminalong wrote: »

However I have the account, and currently £4k in their variable rate ISA @ 3.3%. If I cant find a better rate when the year is up I will certainly just switch this into 123.

And lose its tax free status? :eek:

ses6jwg

The "motives" as far as I am aware is that Santander want to grow their banking liabilities (the amount held in bank accounts) and overall stock numbers (number of active current accounts).

From my experience if you can manage to put a few thousand in both accounts whilst it's taking place then the account transfer service are very very good. I've done quite a few this year and had no problems at all. The problems arise when people don't put enough money in the account to cover their DD's.

If you don't want to move them all just put 2 on there. The most popular ones are Sky and home/ mobile phones as everyone moans about how expensive they are and you get 3% off.

Strumminalong

badger09 wrote: »

And lose its tax free status? :eek:

True, but I'm not sure that would work out a great deal better than interest less tax on the 123 account, when compared with other easy access ISA's that are likely to be around next summer.

Will certainly look around, but this is my emergency fund, and I dont really want to tie it up.

daveoc22

Thanks for all the replies folks.

It seems to make sense, though, giving all that is happening with other accounts, i fear the 3% rate may not last a lot longer.