Santander 123 current account fees rising to £5 in January

Terry98

........and the credit card fee is going up to £3 a month!

http://www.telegraph.co.uk/finance/personalfinance/bank-accounts/11862290/Santander-123-current-account-fees-rising-to-5-in-January.html

roddydogs

Still worth it if youve got £20k to spare which is worth £40 pm. Its a pain but cant say im surprised.

brewerdave

roddydogs wrote: »

Still worth it if youve got £20k to spare which is worth £40 pm. Its a pain but cant say im surprised.

...and for many people the interest will be worth £50 pm after the changes in treatment of tax on savings interest, coming in from April 2016.
My DD rebates will still cover the monthly fee even at £5:)

robotrobo

roddydogs wrote: »

Still worth it if youve got £20k to spare which is worth £40 pm. Its a pain but cant say im surprised.

Your right Rodders!, its even £50 for a non tax payer X4 = £80k, but its still a bit of a surprise to me.:eek:

jamesd

roddydogs wrote: »

Still worth it if youve got £20k to spare which is worth £40 pm.

Only if you don't want to invest, though. It's easy to get 12% from P2P investing and much of mine is at 14% and 19%. Stick just £5k into suitable P2P at 12% and you can make as much as on the whole £20k at Santander. Less things like bad debt potential but I'm only thinking of the P2P lending with secured loans to provide protection for capital so there isn't likely to be much of that.

abdul56

Thanks for letting me know. Its an increase of 150% to their current account fees. That hell of increase in profits.

colsten

Existing thread: https://forums.moneysavingexpert.com/discussion/5323821

roddydogs

Its "Easy" to get 12% plus..... with no risk? How.

edinburgher

This struck me as fairly inevitable, it was only a matter of time before they baited and (current account?) switched enough customers and reduced the benefits of the S123 account.

Before Santander started offering the S123 account, they had a terrible reputation for customer service. The service for the new account (vs. previous accounts that I had opened with them) was greatly improved and the offering seemed reasonably generous (without being a total giveaway).

I suspect that this will lose them quite a few customers. As our DD cashback (just) offsets the increased fees, we'll stay for now, but will need to keep a weather eye on further tweaking...

bowlhead99

abdul56 wrote: »

Thanks for letting me know. Its an increase of 150% to their current account fees. That hell of increase in profits.

Or decrease in losses, if people beyond this forum were using them as a savings account as MSE suggest.

At the moment it costs them £50 each month for a maxed 123 account on instant access, when they could instead get their £20k of funding from overnight LIBOR for £8 a month, or from the 3-month LIBOR market for <£10 a month.

The token £2 a month that the customer pays them is a nominal fee towards this massive business expense, and only covers the extra interest cost (let alone any contribution towards the cashback promotions or actual operating costs of running the current account service) for the customers with average balances under £4k in the accounts.

While the 'average' person in the country doesn't have £4k to sit around in their current account (because median total household savings are not much more than £5k), it's pretty clear that it can cost a big chunk of money to give promotional rates of interest as a marketing tool. Bank fee structures will eventually work themselves out so that customers who don't value the rates of interest or other services offered, will not buy the "value added" bank accounts.

edinburgher wrote: »

This struck me as fairly inevitable, it was only a matter of time before they baited and (current account?) switched enough customers and reduced the benefits of the S123 account.

.
Exactly - it costs money to acquire customers and you can't just give free money to everyone forever. The promotional rates and other things like cashback are just marketing strategy to help them get (or, not lose) customers. There are only so many customers you actually want, given you can easily get money from elsewhere and not everyone is a good target for cross-selling.

Bit harsh to characterise it as a bait-and-switch though, as it had been running for 3 years without a fee increase even as other interest rates in the market continued to fall.

edinburgher

Bit harsh to characterise it as a bait-and-switch though, as it had been running for 3 years without a fee increase even as other interest rates in the market continued to fall.

I'm probably a bit cynical, can quite easily imagine a few Santander execs sitting around and agreeing a fee increase once market penetration reached x million accounts