Santander 123 account fee increasing to £5 from January

Westie983

I am struggling to understand if you save on your monthly bills does that mean you earn less cash back and therefore the fee is more a month then you get in cash back??

reading this thread the ones that are still benefiting from the increase if those people that are getting the cash back on the balance in the account on top of the bills cash back...

I for one would think that my bills would be very high just to cover the £5 fee, if you were getting £5 a month in cash back you could be better off my shopping around....

colsten

Westie983 wrote: »

I am struggling to understand if you save on your monthly bills does that mean you earn less cash back and therefore the fee is more a month then you get in cash back??

Easy to understand.

For every £100 you spend, you might get a maximum of £3 cashback. More likely, it would be just £1 or £2, or may be even nothing.

It certainly does not make any sense at all, and it never did, to spend money in order to receive cashback. You either have a real need to spend money or you don't. If you do, it's of course good if you can do it in a way that pays you cashback.

Santander increasing their monthly fees makes no difference at all to any of this.

Zandoni

It's pretty obvious to me that the 123 account was created to get people used to paying a monthly fee. The fee will probably go up more and the benefits will erode over the next few years.

colsten

I would disagree with that assessment. The account has been going for over 3 years, and people have had huge benefits from the interest and the cashback. Everyone can very easily switch their account away from Santander if they so wish so nobody is held hostage if they don't like the account any longer.

sportsarb

Okay, so I'm getting £5.50 cashback and have just short of 10k in the account. So this still appears to be easily the best account for me. The cashback will drop slightly as my mortgage has just exited a fixed period meaning it reduces very slightly.

Probably makes sense to shop around for best mortgage deal now even if I can't really be bothered with all the hassle involved.

Consumerist

Zandoni wrote: »

It's pretty obvious to me that the 123 account was created to get people used to paying a monthly fee. The fee will probably go up more and the benefits will erode over the next few years.

I think I'm inclined to agree that banking has been edging towards the concept of paying fees for banking.

I suspect that the CMA investigation has raised the spectre of it being forced on banks as an alternative to "free" banking where those with overdrafts are bearing the brunt of the cost.

SAHD_Jim

bxboards wrote: »

Sorry but anyone getting over 5 pounds a month just on bills cashback is not being very moneysaving.

I accept that many people will struggle to achieve the £5 cashback, but to make the generalised assumption above is nonsense...

bxboards wrote: »

My mobile contract is 5 pounds a month with TalkTalk, 500mm minutes, unlimted txt, 1GB data

Why not ditch the mobile phone altogether, that'd save £5 a month? You seem to think £5 a month is really moneysaving, yet I pay probably £5 every three months to top up my phone. You may feel 1GB of mobile data is enough but it's 1GB more than I need and then again my wife needs more than than 1GB.

bxboards wrote: »

My broadband is with BT Infinity and costs me 10 pounds a month.

Other people are perfectly happy with a cheaper-than-£10 non-fibre option. On the other hand, why not just ditch the broadband and pay nothing? Just don't use the internet.

bxboards wrote: »

I don't see quite what there is to dis-agree with - only the council tax will generally be fixed out of most bills. If someone can't save £3 a month on bill outgoings to offset the £3 fee increase, you are on the wrong site too be honest

Just because people are paying more than you does not in itself mean they could or indeed should be paying less and are not getting the best deal for what they want or need.

The site encourages one to be (and I quote) "an active, savvy consumer and shifting to the very best deals". If it was simply about saving as much money as possible, why would there a section on haggling things like Sky TV, including the expensive premium options. Surely no "moneysaver" should have Sky Sports? I don't have pay TV, but understand that some people want to have it.

There is a section on the site about buying a car, surely walking is better moneysaving?

Stay at home and have no holiday and you can save even more, and yet there is a section on travel?

etc.


Fact is that everyone has different requirements and one person's luxury is another person's necessity. As I have shown, you could save more money but you choose not to, so by your own reasoning, you're "not being very moneysaving"

sportsarb

My attitude to money saving is getting the most I can for the least cost I can. It's not about cutting everything to the point where I can't do anything any more aside from walk the streets or stare at the walls.

I've also improved at getting better returns on my savings from a couple of years ago to the tune of at least a couple of hundred pounds extra.

Nick_C

For people who plan to ditch and switch, it's worth noting that you have more than three months left to exploit Santander. You could milk the account for the next 3 months by contacting your utility companies and asking them to increase your monthly direct debits. You might also try clearing this year's Council Tax.

On a separate point, I wonder how many people are getting unexpected cashback on the account? I used to have a gym membership with my local council which I paid by monthly DD. I got 1% cashback on this in addition to the 1% on my Council Tax. I expect Santander treat any DD to a local council as being for Council Tax. I wonder if any council tenants are getting cash beak on their rent?

ratechaser

Nick_C wrote: »

Inevitable that they couldn't offer this loss leader for ever. I'm currently borrowing money from Santander at 2.5% (lifetime tracker mortgage) and lending it back to them at 3% (123 current account). Clearly not profitable for them.

My cashback on utility bills averages around £5.70 a month, which will cover the new fee and leave me with a small profit. The £7 a month cashback on my mortgage continues to make the 123 account very attractive to me, even if I don't use it as a savings account.

On the credit card, I've had £120 regular cashback and a further £36 "my offers" cashback in the last year, on a spend of £8250. If "my offers" continue the way they have, they should cover the monthly fee and leave me with a cashback rate of close to 1.5%, so I'll be keeping the credit card as well.

I was having a read through this thread as I was just about to open a 3rd and possibly 4th 123 account, and wanted to be clear in my mind that it was still worth it to me (it is), but Nick, your post caught my eye...


Are you a non-taxpayer for interest then - as otherwise I can't see how 3% gross interest from a 123 account beats a 2.5% borrow rate - even a 20% tax rate on those 'savings' pushes it down to 2.4%, and that's without the impact of account fees?


I only ask as I play this game too - but the differential is bigger, Santander mortgage at 1% (base + .5% for life) versus Investec base rate tracker bond at 2.6%. Even then, after tax, I'm pulling in less than 1% net on this deal - but obviously you can't turn free money down!