Santander 123 rate to be cut to 1.5%

Stompa

Well, having just received my letters from Santander, I can't help wondering why they chose to send out one letter per account, rather than one letter per account holder!

adindas

Nick_C wrote: »

You are speaking from a position of ignorance and false assumptions. I do more than enough research and have a good knowledge of the products available. I am aware of the NatWest account you reference, and have already investigated it.

My DD cashback with Santander is currently £159 pa. Take off the full fee of £60 and I’m getting £99 plus interest at 1.5%

If I switched to NatWest, I would get £142 pa, less a fee of £36, giving me £106 pa and no interest.

I remind you to what you have written here and I have highlighted it with red colour in my previous post #227

This is what you have written
"Even with no interest, the cashback on DDs more than compensates for the fee for many" Not with your calculation with 1.5% Interest.

This is the fact about Natwest. You could put £1 (say) to get 3% cashback.
"Earn 3% in Rewards on seven types of household bills paid by Direct Debit, including Council Tax Only £3 a month"
So 3% in Rewards across the board not only on particular bill with only £3 fee. I will leave it to MSEr with good knowledge to see which one is better.

[FONT=&quot]If you have more cash and have maxed out all 2%+ interest including RSA you could put your money into Atom Bank earning 2% interest as per my post no [/FONT][FONT=&quot]# 221
[/FONT]

Nick_C wrote: »

For someone who does research and has a good knowledge, I’m surprised I need to educate you on this, but banks are currently lending to each other at 0.5% for overnight and 0.73% for 12 months.

I misunderstood your statement about "they" which I thought you are referring to Santander customer.

Nick_C

adindas wrote: »

I remind you to what you have written here and I have highlighted it with red colour in my previous post #227

This is what you have written
"Even with no interest, the cashback on DDs more than compensates for the fee for many" Not with your calculation with 1.5% Interest.

This is the fact about Natwest. You do not meed to put a lot of money to get 3% cashback.
"Earn 3% in Rewards on seven types of household bills paid by Direct Debit, including Council Tax Only £3 a month"
So 3% in Rewards across the board not only on particular bill with only £3 fee. I will leave it to MSEr with good knowledge to see which one is better.

[FONT=&quot]If you have more cash and have maxed out all 2%+ interest including RSA you could put your money into Atom Bank earning 2% interest as per my post no [/FONT][FONT=&quot]# 221

[/FONT]

I don't understand the point you are trying to make. Perhaps you don't either.

"Even with no interest the cashback on DDs more than compensates for the fee for many" - absolutely, and I've given you the figures to prove it! My fee is £5.00 a month, my cashback is £13.25 a month. So even with no interest, the cashback compensates for the fee!

£13.25 > £5.00

QED

badger09

adindas wrote: »

When they increased the fee to £5 I think it is still reasonable.

But if Santander slash the interest to 2%



I hope Santander will be doing enough research and risk assessment as they will definitely suffer the cash flow problem if many people move their money at relatively the same time span.

Have I missed something, or have you?:cool:

Santander are cutting the interest rate to 1.5%, not 2%, from 1 November

Nick_C

Nick_C wrote: »

I think Santander know exactly what they are doing.

...

They will end up with more customers than they had before they launched their loss leader 123 account.

And they can borrow money on the markets much cheaper than 1.5%.

adindas wrote: »

I misunderstood your statement about "they" which I thought you are referring to Santander customer.

Clearly. But "they" in each instance referred to Santander.

adindas

Nick_C wrote: »

I don't understand the point you are trying to make. Perhaps you don't either.

"Even with no interest the cashback on DDs more than compensates for the fee for many" - absolutely, and I've given you the figures to prove it! My fee is £5.00 a month, my cashback is £13.25 a month. So even with no interest, the cashback compensates for the fee!

£13.25 > £5.00

QED

Yes £13.25 > £5.00
But this is not a math test. The topic in this thread here is to assess how good Santander with 1.5% to be compared with other option in the market whether to ditch it or not ...

Of course for people who could not find a better alternative then they are forced to stay. But if they could they will ditch it ...

adindas

badger09 wrote: »

Have I missed something, or have you?:cool:

Santander are cutting the interest rate to 1.5%, not 2%, from 1 November

My point here is that even with 2% it will not be interesting anymore, considering other better option in the market e.g (2% Interest from Atom Bank + 3% Cashback from Natwest with lower monthly fee of £3). Let alone 1.5%

bxboards

I think what adinas is trying to say is that its a bit silly to keep the DDs with Santander, when Natwest is paying more in cashback for Direct Debits.

That doesn't stop people keeping the savings with Santander if the 1,5% interest still appeals. but using the DDs to 'pay' the Santander fee, when moving the DDs to Natwest which pay more in DD cashback doesn't feel like MoneySaving to me.

If you can get a fiver a month in DD cashback from Santander, you can get more than a fiver with Natwest.

Nick_C

adindas wrote: »

Yes £13.25 > £5.00
But this is not a math test.

Well actually it is a maths test. It's a question of each individual crunching the numbers and working out their own personal bottom line. But the result will not be the same for everyone.

adindas wrote: »

The topic in this thread here is to assess how good Santander with 1.5% to be compared with other option in the market whether to ditch it or not ...

Of course if who could not find a better alternative then you are forced to stay. But if you could and ditch it ...

And I have already explained to you that if we only look at cashback on DDs, I would be better off switching to Natwest. I would gain £7 a year. Personally, I don't think its worth the hassle of switching to NatWest for £7 a year, especially as this is another loss leader. Especially when I can downgrade to 123 Lite, save £48 a year in fees, and be £41 a year better off than moving to NatWest.

But it's not only about cashback. It's about interest as well. If I keep the 123 account that pays 1.5% interest and keep an average balance of just £500 in it, the £7.50 interest means I am better off than switching to Nat West.

bxboards wrote: »

I think what adinas is trying to say is that its a bit silly to keep the DDs with Santander, when Natwest is paying more in cashback for Direct Debits.

That doesn't stop people keeping the savings with Santander if the 1,5% interest still appeals. but using the DDs to 'pay' the Santander fee, when moving the DDs to Natwest which pay more in DD cashback doesn't feel like MoneySaving to me.

If you can get a fiver a month in DD cashback from Santander, you can get more than a fiver with Natwest.

If you look at cashback minus fees, I can get more from Santander than I can get from Natwest. This may not be true for everyone.

Nick_C

Stompa wrote: »

Well, having just received my letters from Santander, I can't help wondering why they chose to send out one letter per account, rather than one letter per account holder!

I think only getting letters that explained how the changes will affect me and what my options are is a lot better than having to plough through a load of generic information that is not relevant to me. It's good customer service.

Trying to collate letters from different print runs would probably have cost more than sending out multiple mailings to some customers.