Santander 123 Account

isayhello

I'm looking to open and put around 19 or 20k into the santander 123 account.

I just wanted to check that if you go over a 20k balance, there are no penalties to the 3% interest rate you would get?

The other most important question for me is whether this account is still worth it if you don't claim cashback on any bills but purely use it for saving 20k in. After the £24 fee for the year is taken off, does this account still come out on top of other current savings accounts?

Thanks

akamustang

There is no penalty for going over the 20k, it's just that the 3% interest is only earnt on the first 20k, so going over this is pointless as it earns you nothing.

Taking into account the £24 you'd still be getting 2.88% if you're putting 20k into it.

What you could do is put the 20k into the 3% and then drip feed it into a regular saver at a higher interest rate. Not sure what is available right now but I have a First Direct at 8% and a Nationwide at 6%.

Where is this money sitting at the moment?

innovate

akamustang wrote: »

Not sure what is available right now but I have a First Direct at 8% and a Nationwide at 6%.

Neither of these are available to new savers.

https://forums.moneysavingexpert.com/discussion/608697

sva14

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.

I got a letter from santander today abount this 123 account, looked up the post on MSE and the above caught my attention.

I have a A&L mtge which allows overpayment and the facilty to withdraw the overpayment. So I figure normal mtge £400, Put in £1000 each month, gets me £10 cashback per month.

Question is can I keep withdrawing the credit facility of £600 each month?

This account seems to have a win win situation for me 3% interest, I will put £10k savings in there and put most of my DD for cashback on there. The cash back from DD should cover the £24 fee, so the main aim will be getting 3.00%/ 2.40net% on the £10k savings and the incentive of additional cashback through the mortgage overpayment/ credit facilty withdraw plan!



Oh of course sign up from Quidco as well

ColdIron

You may not want the cashback but I thought one of the conditions to receive interest was you have to set up 2 direct debits. Were you thinking of using 2 non-qualifying DDs?

pyrolizzie

If anyone is interested it is possible to open a second Santander 123 account in order to gain the 3% interest on savings up to £20k. Obviously you need to divert a couple of DD's from your original 123 account and also ensure you can put in at least £500 a month from an external source (not the original 123 account).
We have just done this, as we had over £40k to invest and was looking for something short term to get a decent rate.
In addition if you do this through Quidco they are paying £55 cashback.

a&akay

If you're joint 123 holders with one non taxpayer and don't need to use it as a main account, don't forget to take the taxpayer off the account otherwise they'll take tax on half of the interest. Has to be done in Branch by both present with proof of account and photos eg passports.

isayhello

akamustang wrote: »

[snip]
Taking into account the £24 you'd still be getting 2.88% if you're putting 20k into it.

Thanks for your reply, how do you work it out to goto 2.88% from 3%?

akamustang

With £3,000
Non-tax payer: (£3,000 * 3% - £24) / £3,000 = 2.20%
Basic rate tax payer: (£3,000 * 3% - £24 / (1 - 20%)) / £3,000 = 2.00%

With £20,000
Non-tax payer: (£20,000 * 3% - £24) / £20,000 = 2.88%
Basic rate tax payer: (£20,000 * 3% - £24 / (1 - 20%)) / £20,000 = 2.85%

psychic_teabag

It's very slightly lower than that if you pay tax, since the fee is deducted from the net interest.

I make it a deduction of 0.12% for non-taxpayer (as above), 0.15% for a 20% payer, and 0.2% for a 40% taxpayer.