Santander 123 Account

Shortypie89

Hi all,

I read Martin's take on using the Santander 123 account with interest.
He noted "it only adds up for those with higher spending and higher savings - or those with Santander mortgages"

Just wondering whether it's good for people with good savings who aren't big spenders?
My savings have been sitting getting no interest for a couple of months now and I need to put them somewhere!

Thanks!

JimmyTheWig

The account costs £2 a month.
You need to pay in £500 a month and have two DDs set up on the account.
So you can't _just_ use it as a savings account.

For that, you get cashback on your household DDs (e.g. gas and electric) and high interest.
If you're looking at it just as a savings account, and are happy to meet the other requirements, then it depends on how much money you will have in there (and what rate of income tax you pay) as to whether the high interest rate is worth the monthly fee.

Shortypie89

Thanks.
I'd be able to do that, but am also wondering whether you are allowed to pay £500 in per month but also withdraw money as regularly as you need it?
It doesn't give you any interest on savings above 20k, but if I put in 20k, paid in £500 per month and took it out again, would that be ok?
I pay the normal rate of incomce tax

miketaff1408

Shortypie89 wrote: »

Thanks.
I'd be able to do that, but am also wondering whether you are allowed to pay £500 in per month but also withdraw money as regularly as you need it?
It doesn't give you any interest on savings above 20k, but if I put in 20k, paid in £500 per month and took it out again, would that be ok?
I pay the normal rate of incomce tax

I have just opened one of these for the very same reason. I am keeping the account as close to 20k as I can. I have moved over all the direct debits which wilk give cashback such as gas, electric, water, mobiles, tv, broadband and council tax. I estimate the cashback will get me about £10.

I will transfer £500 every month, and then transfer it straight back out if it takes the account above 20k.

JimmyTheWig

Shortypie89 wrote: »

Thanks.
I'd be able to do that, but am also wondering whether you are allowed to pay £500 in per month but also withdraw money as regularly as you need it?
It doesn't give you any interest on savings above 20k, but if I put in 20k, paid in £500 per month and took it out again, would that be ok?
I pay the normal rate of incomce tax

Yes, it is a current account. So it is _designed_ for money to come out of it often.

A quick looks shows that a top savings account is paying 2.35% interest. Which means with the 123 you're getting 0.65% more. That's £130 (£104, after basic rate tax) extra a year, which more than covers the £36 fees over a year.

So yes, if you're happy with the hassle of funding it and setting up the direct debits then it is worth it for you.

apt

Quidco is offering £55 cashback for a 123 account, Topcashback £45. That should offset the £2 fee for a few months.

ManAtHome

You can also withdraw Euros from Santander ATMs in Spain without charges (haven't done the 'forensic checks', but looks like Visa rates to me).

Shortypie89

Thanks for the advice everyone. I've decided to go for it, via quidco. If I set-up a monthly standing order in and one back out it shouldn't be too much hassle

bongoali

I have a Santander mortgage which allows unlimited overpayments and unlimited withdrawals of the overpayments

Might set up direct debit to pay £10K a month off my mortgage to get £100 cashback and then withdraw the overpayment and put it back into my 1-2-3 account.

Naughty, but nice.

JimmyTheWig

bongoali wrote: »

I have a Santander mortgage which allows unlimited overpayments and unlimited withdrawals of the overpayments

Might set up direct debit to pay £10K a month off my mortgage to get £100 cashback and then withdraw the overpayment and put it back into my 1-2-3 account.

Naughty, but nice.

There's a maximum of £10 a month mortgage cashback (i.e. no point paying over £1000 a month on your mortgage) but other than that I like the plan!

miketaff1408

Shortypie89 wrote: »

Thanks for the advice everyone. I've decided to go for it, via quidco. If I set-up a monthly standing order in and one back out it shouldn't be too much hassle

Don' t forget that the £500 funding per month is based on the date from which you opened the account, not by calender month. so for example if you opened your account on Jan 17, paid in £500 on the 18th Jan and then again on 12th Feb, both these payments would fall in the FIRST month' s payment window.

Of course, a standing order as you have indicated would eliminate this problem. I would recommend making the standing order date about a week after the account opening date to allow for shorter months messing up the monthly cycle.