Santander 123 account fee increasing to £5 from January

eskbanker

ratechaser wrote: »

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...

Don't build your hopes up - you can only have one sole and one joint account, so between a couple you can have a maximum of three.

Nick_C

ratechaser wrote: »

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'm a basic rate taxpayer, and I use my 123 account to cover monthly expenses and as a temporary place to store cash. It's not my main savings account, but its worth it for me for the cashback alone.

I could afford to clear my mortgage, but as I can lend or invest the money at a greater return than 2.5% net, I prefer not to. My OH and I have RS accounts with YBS that pay 3.75% gross (no longer available to new customers). And while the annual dividend yield on my investments is currently running at just over 4% net, the true return including capital gains has averaged 14.5% net over the last 7 years.

When base rates go over 2%, I'll think about clearing some or all of the mortgage.

ratechaser

eskbanker wrote: »

Don't build your hopes up - you can only have one sole and one joint account, so between a couple you can have a maximum of three.

So I understand, however I opened 2 joint ones back before the rules on that changed so I'm hoping that my DW and I can both additionally have a sole account. I guess they could tell us that one of the joint ones has to be converted, but as a valued Select customer (ha!), I'm going to stay optimistic for now...

ratechaser

Nick_C wrote: »

I'm a basic rate taxpayer, and I use my 123 account to cover monthly expenses and as a temporary place to store cash. It's not my main savings account, but its worth it for me for the cashback alone.

I could afford to clear my mortgage, but as I can lend or invest the money at a greater return than 2.5% net, I prefer not to. My OH and I have RS accounts with YBS that pay 3.75% gross (no longer available to new customers). And while the annual dividend yield on my investments is currently running at just over 4% net, the true return including capital gains has averaged 14.5% net over the last 7 years.

When base rates go over 2%, I'll think about clearing some or all of the mortgage.

Glad to see that it works out then, although you're a braver man than me if you're directly using mortgage funds to invest in equities, or anything that carries a real capital risk!


I'm all for arbitrage where I can place mortgage funds in an opposite/equivalent investment vehicle (i.e. the Investec one that tracks against base rate movements same as the mortgage) - the net return may be less, but at least it is guaranteed.

eskbanker

ratechaser wrote: »

So I understand, however I opened 2 joint ones back before the rules on that changed so I'm hoping that my DW and I can both additionally have a sole account. I guess they could tell us that one of the joint ones has to be converted, but as a valued Select customer (ha!), I'm going to stay optimistic for now...

Come back and let us know how you get on, some of us may be particularly interested in the answer!

Zandoni

colsten wrote: »

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.

Yes it has been going for three years and I must admit this rise in monthly fee has taken a lot longer than I thought, they must have been waiting to get vast numbers of account holders.

People can easily switch but there will be many that don't bother.

m0bov

Well, from my point of view I was surprised they have hiked the fees and by so much I get about 5 pounds from cash back on the current account and don't tend to keep much "spare" cash in it so its a no brainer to change. However I make about 8 pounds on the credit card each month, so is it worth keeping it?

I noticed the ISA with First Direct is better than Santander so my plan is to:
Switch Current AC and ISA AC to FD and keep the 123 Credit Card.

What do you think? FD pay 150 pounds which is worth far more than any cash back deals. I use my credit card at Morrisons and Shell and pay off in full each month.

colsten

Zandoni wrote: »

People can easily switch but there will be many that don't bother.

We can hardly blame Santander for people not switching when they really should.

Zandoni

colsten wrote: »

We can hardly blame Santander for people not switching when they really should.

No but it's they way they work. Same with savings accounts with their one year interest deal.

I'm not complaining though because I do switch around and that gives me some better deals.

colsten

Zandoni wrote: »

No but it's they way they work. Same with savings accounts with their one year interest deal.

It shouldn't come as a surprise to people that they have to take responsibility for their own accounts and their own money. On the one hand, people keep complaining about being nannied, and when they are being treated as grown-ups on the other, they complain, too. People seem to be pretty on the ball when making the best for themselves from direct or indirect offers (switching bonus, cashback, using current accounts for savings etc etc) so it's a bit hard to understand why they should suddenly turn into helpless creatures when T&Cs of their accounts change.