Santander 123 rate to be cut to 1.5%

schiff

adindas wrote: »

Good luck then for people who have faith that the interest rate will not change again. What is for sure is that with flexible they could change it anytime they want to .

Doesn't that apply to every account with flexible interest rates though

Alter_ego

Nick_C wrote: »

Yes. The interest rate is variable. Santander have varied it, and are now paying BR + 1.25%

Not after subtracting £5 charge! In fact if you ignore cashback on DDs, the rate paid on £20,000 is actually 1.19% = Nowhere near 1.5%

Nick_C

Alter_ego wrote: »

Not after subtracting £5 charge! In fact if you ignore cashback on DDs, the rate paid on £20,000 is actually 1.19% = Nowhere near 1.5%

If you ignore cashback on DDs then the fee you should be using for this notional calculation is £4 not £5.

You pay £1 a month for an account that gives you DD cashback. You pay an extra £4 of you want interest as well. On that basis, it's 1.26% interest on £20K

Frogletina

Alter_ego wrote: »

Not after subtracting £5 charge! In fact if you ignore cashback on DDs, the rate paid on £20,000 is actually 1.19% = Nowhere near 1.5%

The interest is 1.5%, the rest is a charge levied by the bank.

When calculating the interest towards your personal savings allowance, whether £500 or £1000, the £5 charge will not be taken into account.

adindas

Nick_C wrote: »

If you ignore cashback on DDs then the fee you should be using for this notional calculation is £4 not £5.

You pay £1 a month for an account that gives you DD cashback. You pay an extra £4 of you want interest as well. On that basis, it's 1.26% interest on £20K

I am pretty sure that Majority of Santander customers are in lower tax band.

Also I have not checked it yet. Is this using the assumption that people have full £20,000 for the whole year? Well many people do not ...

And then, which one provide better interest 1.26% (?) or
- Fixed rate of 2% in Atom bank
- Fixed rate feeding to RSA 2%, aiming at the one which allow at least one fee free withdrawal per year. Some RSA take up to £500 a month, some allow no penalty for multiple withdrawal within a year.
- Not to mention fixed vs Variable at Santander. Santander might change again the fee and/or interest within one year, especially if enough people stay with Santander123 despite the experience recently (e.g increase in fee £5 and enormous cut in interest). The BoE just cut it by 0.25% but they cut it by 1.5%.
- For cashback only downgrade it to Santander 123 lite or switch it to Natwest whatever is better.

Certainly instant access is not comparable to fixed rate. But keep in mind that reasonable people who put £20,000 at Santander123 must already have instant access at other better paying interest current accounts anywhere else which could be used anytime. The one free withdrawal in RSA could be used as an exit strategy. I believe majority of 123 account holders match these profiles.

Alter_ego

Nick_C wrote: »

If you ignore cashback on DDs then the fee you should be using for this notional calculation is £4 not £5.

You pay £1 a month for an account that gives you DD cashback. You pay an extra £4 of you want interest as well. On that basis, it's 1.26% interest on £20K

On the basis that I want a return on £20,000 I get 1.19% return after Deduction of £5 per month. FACT
At least I will after Nov 1st if I keep a Santander 123

Ballard

adindas wrote: »

The BoE just cut it by 0.25% but they cut it by 1.5.

Out of interest, how much money do you think that Santander made from each full (£20k) account per year?

schiff

Ballard wrote: »

Out of interest, how much money do you think that Santander made from each full (£20k) account per year?

The last statement for my longer lasting account shows that I've had £2290 interest since the start. It's not like a credit card account where the banks charge for transactions, so I would guess that account has cost them.

Ballard

schiff wrote: »

The last statement for my longer lasting account shows that I've had £2290 interest since the start. It's not like a credit card account where the banks charge for transactions, so I would guess that account has cost them.

Exactly. Borrowing money at 3% in the current market conditions is not good business because they will be lending the vast majority of it at a fraction of 1%. Those who've had an account with £20k in for any length of time should think themselves lucky.

It's true that the base rate only dropped 25 basis points but that was probably only the catalyst to get Santander to lower their rates. I would imagine that this drop has been on the cards for a while, to be honest.

£20k earns around £600 (soon to be £300) per year and this effectively insures against theft and allows instant access. To my mind that's not a bad service. There are plenty of other banks around, some of which offer higher rates so there's the answer for those who aren't happy.

I should once again reiterate that I'm not trying to get sympathy for any bank. They make a fortune. My point is simply that they don't owe us high interest rates and it shouldn't be a surprise when they lower them.

castle96

Currently 'frightening' myself at the amount I am 'saving' each month in Regular Saver a/c's. Of course this is just money coming out of Santanders 1.5 jobbie, into various a/c's at 6% down to 2%. At some stage will need to close my 2nd sole 123 as it will no longer be viable. Have in the past, filled all the other viable current a/c's, but at some stage these may also no longer be viable to retain due to rate reductions. By then, the option for the current Regular Savers may well be gone, so thought best to do it now. Of course the Regular Savers may well go as well... What a lot of faphing about for a small return/%, but it is enjoyable (and almost a social 'duty'), to maximise the return on funds.If I snuffed it tomorrow, anyone looking at my miriade of DDMs , S/Os and accounts (used and unused), will be amazed (and confused). Or is it 'Dazed and confused' - Led Zep. Yes I know there are other ways... S & Ss, P2P, etc,. I even thought of BTL, but I keep watching 'Can't pay, won't pay' ! and I just know I would be left with a disappeared East European tenant and a burnt shell. Risk adverse I suppose describes me. Hey ho, just carry on