Santander 123 rate to be cut to 1.5%

crumpetman

Rygar wrote: »

In a current account that gives zero interest. I appreciate that I can spread it around various accounts giving more than 1.5% but it seems a lot of hassle for the relatively low return. I didn't really want to go down that route originally but I guess I may now have to if I want any sort of return on my savings.

Currently
20K santander 123
15K Coventry BS ISA
20K zero interest current account

You have 20K sitting in a zero interest account? And you are posting on a money saving forum? Use the current accounts already posted and you will get at least £600 a year before tax.

uk1

If as a result of the small drop in interest by the BOE Santander drops it's rate by 1.5%, presumably the new rate is now considerably more affordable than the old one. Presumably the reason for the old £20k cap was to address the afordability challenge.

If so wouldn't it be a slightly redeeming if Santander increased the £20k cap and allowed unlimited balances at the new interest rate.



Jeff

Nick_C

uk1 wrote: »

If as a result of the small drop in interest by the BOE Santander drops it's rate by 1.5%, presumably the new rate is now considerably more affordable than the old one. Presumably the reason for the old £20k cap was to address the afordability challenge.

If so wouldn't it be a slightly redeeming if Santander increased the £20k cap and allowed unlimited balances at the new interest rate.



Jeff

But they don't actually need to borrow money from you at 1.5% when they can borrow it cheaper elsewhere. They just want you to use them for your main current account and hopefully make some money out of you in the long term.

The recent trend to pay high rates of interest - or indeed any interest - on a current account was just a marketing ploy.

Banks have traditionally made money by selling you things you don't need, or charging you for overdrafts. Running a current account in credit doesn't make money for them. They should really be be charging to run your current account for you.

I think it won't be long before they stop paying cashback on direct debits as well.

Ballard

I agree with Nick.

For those not involved in banking it's easy (and understandable) to think that banks make a killing from holding onto your money. When market rates are higher that makes more sense but in this climate they can't do a lot with the money so it's a loss leader.

Realistically we were lucky to get these relatively high rates for so long. It'll be a real shame to see them go (if they all do) but I think myself fortunate to have sufficient cash to earn decent interest. There are millions in a worse situation.

bigadaj

Ballard wrote: »

I agree with Nick.

For those not involved in banking it's easy (and understandable) to think that banks make a killing from holding onto your money. When market rates are higher that makes more sense but in this climate they can't do a lot with the money so it's a loss leader.

Realistically we were lucky to get these relatively high rates for so long. It'll be a real shame to see them go (if they all do) but I think myself fortunate to have sufficient cash to earn decent interest. There are millions in a worse situation.

Agreement didn't turn out well for the other Nick c in the longer term.

[Deleted User]

This is not good, for my stoozing...


Just at a time when I've had the biggest ever stooze pot!

uk1

Ballard wrote: »

I agree with Nick.

For those not involved in banking it's easy (and understandable) to think that banks make a killing from holding onto your money. When market rates are higher that makes more sense but in this climate they can't do a lot with the money so it's a loss leader.

Realistically we were lucky to get these relatively high rates for so long. It'll be a real shame to see them go (if they all do) but I think myself fortunate to have sufficient cash to earn decent interest. There are millions in a worse situation.

You and Nick for some reason seem to have presumed that others do not understand. I fully understood the point without being in banking - thanks.

The point you both seem to have overlooked is the argument that you and Nick made holds equally true if they had set the limits at £10k or even £5k. I have never understood the high limit. In fact I would have thought with Santander's profile of not exactly being "personal banking" a £5k limit would have attracted more of the the exact type of people they were seeking at a lower cost.

Jeff

Ballard

uk1 wrote: »

You and Nick for some reason seem to have presumed that others do not understand. I fully understood the point without being in banking - thanks.

The point you both seem to have overlooked is the argument that you and Nick made holds equally true if they had set the limits at £10k or even £5k. I have never understood the high limit. In fact I would have thought with Santander's profile of not exactly being "personal banking" a £5k limit would have attracted more of the the exact type of people they were seeking at a lower cost.

Jeff

I certainly wasn't tarring everyone with the same brush and furthermore I made it clear that it would be an understandable mistake to make. The people to whom I directed the post were those who have suggested that Santander have taken advantage of the base rate cut to increase their profits further. There have also been a few, in my opinion, misguided posts recently that if ever banks started charging for deposits they'll withdraw all of their cash and put it under the mattress.

joe134

Ballard wrote: »

I certainly wasn't tarring everyone with the same brush and furthermore I made it clear that it would be an understandable mistake to make. The people to whom I directed the post were those who have suggested that Santander have taken advantage of the base rate cut to increase their profits further. There have also been a few, in my opinion, misguided posts recently that if ever banks started charging for deposits they'll withdraw all of their cash and put it under the mattress.

Between yourself and Nick c , it's like a script from the Chuckle Brothers.
From me to you;
If it wasn't for the cheap money the Gov gave ALL these banks, they would need ours, and pay a Decent rate, all round.

You both make out Banks are Altruistic benevolent societies.
apologists for poor them, helping us poor ignorant peasants,,who don't understand what makes the world tick.
It's a Cartel.full of over paid crooks.
You don't bite the hand that feeds you;;)

I'm not panicking, as I said, spilt milk.
But, it's gonna get worse, and the other a/c,s that I'm with. et.al, paying 3>5% are now going to revise their rates, DOWN.
Don't wait till you read it, use your noddle.
It's not over reacting , it's life.
Don't rule out Zero rate BOE.
Negative NO .
And WE haven't had it good, the Bloody Bankers have.
As for keeping money under the bed..
It happens all the time, it's call Offshore Accounts, tax havens, all run by .
You Guessed it, BIG banks..

Ballard

Joe,

I've stated clearly in a separate post that banks don't deserve our sympathy. What I've said in this post is that paying 2 or more percent on current accounts isn't good for the banks. Banks can't simply use balances on current accounts to lend at higher rates. They will be able to use some of it for that purpose but under liquidity rules they will need to keep a large percentage of it available for withdrawal. This means that they'll be lending it at a fraction of 1%. It simply doesn't make economic sense.

Writing in sentences is far from overrated.