Santander 123 rate to be cut to 1.5%

xylophone

Do you have other high interest paying current accounts?

Consumerist

You need to tread carefully with high-interest paying current accounts at the moment because many are currently reviewing their rates and you don't want to be jumping out of the frying pan ..., as it were.

£60k is a lot to find a decent new home for at the moment and alternative options seem to be pulling up the drawbridge on rates. The party really does seem to be over and we all may need to get used to the idea of swallowing the fallout.

YorkshireBoy

brizey47 wrote: »

Does anyone know of an alternative that will give us a better return once the rates change...

There were better alternatives even before Santander announced they were cutting the rate, but all involved a bit more work!

If you haven't got any of the other high interest current accounts then the entire £60K (and another £10.5K besides!) can be housed in 3% (clean) - 5% current accounts between you.

1kevfp

We are in the same boat, not in receipt of state pension so reliant on savings and thankfully a company pension

If you are internet savvy the new intenet based Atom Bank has recently increased it max holding to £100k @ 2% per account you are covered by the governments FSCS up to £75k so a low risk,its in its infancy but gathering a lot of attention

adindas

brizey47 wrote: »

Between my wife and I we have 3 123 accounts with £20000 in each returning a current interest of around £50 each month for each account. The utility cashback just about covers the monthly fee for one of the accounts but after Nov all will only return about £25. Does anyone know of an alternative that will give us a better return once the rates change, we are retired and welcome this interest as aboost to our pension.

1. Sweep all other best high interest current accounts available here. It will involve opening of several bank accounts available here:
http://www.moneysavingexpert.com/banking/compare-best-bank-accounts

2. After doing that and you still have a lot of cash, open Regular saver account (RSA) aiming at paying 3%+ interest and drip feed it to this RSAs. Again involve a lot of work opening multiple Regular Saver account. Available here
https://forums.moneysavingexpert.com/discussion/608697

3. If you still have money left after doing #1 and #2, open Atom bank 1 year fixed saver @ 2%. It could take up to £100,000. Just be aware you will need to lock your money for at least one year (e.g one year fix year). So only put part of your money here (not all) the part of it you are pretty sure you will not need it for at least one year.
https://www.atombank.co.uk/

4. After one year elapse repeat the iteration.

You could also ignore #1 and #2 and just do #3 if you do not want to open multiple accounts.

I think Santander have been underestimating the number of people who are willing to pull out their money when making decision to drop the interest to 1.5% + increase in fee (on earlier date). No doubt it will have impact on their short term cash flow

Also the emerging of challenger bank such as Atom Bank who are willing to provide a higher interest rate @2% and take up to £100,000 is a real game changer.

Consumerist

From <Atom Bank website>:

Fixed Saver

If you’re saving for something special and have a lump sum to put away, a Fixed Saver could be a good option, as it lets you know in advance what interest you’ll earn on your money. Our Fixed Saver is currently open to those who registered with us before 16th September. We’ll be opening our doors up to everyone very soon, so sign up and we’ll let you know when you can get hold of our competitive rates.

So, you may not get the same rate as currently being offered.

schiff

The problem with 'getting rid' of money out of Santander accounts is that using RSs takes such a long time. I'm keeping my main Santander account where the DDs cash-back will more than cover the charge, as I use it for so much; I may switch the second account to a current account that provides a switching bonus and then deplete it, but even then with both Santander accounts currently 'full' it is going to take quite some time till I'm totally out of the second Santander account and its 1.5% interest - with unfortunately no cash-back - (which actually I'll probably be quite happy with come November 1st!)

adindas

Consumerist wrote: »

From <Atom Bank website>:

So, you may not get the same rate as currently being offered.

I just called them about 2.5 hours ago. They said you will need to register first and it might take about 2-3 days before you receive the invitation. The same process apply to people who have registered earlier.

There are currently sorting out the people who have registered previously and will hopefully deal with the one who just registered. If you do not register you will not know.

Just be aware no web access at the moment just via Apps on IOS, Android or Windows apps so if this is no your cuppa then this account is not suitable for you.

Consumerist

schiff wrote: »

The problem with 'getting rid' of money out of Santander accounts is that using RSs takes such a long time. I'm keeping my main Santander account where the DDs cash-back will more than cover the charge, as I use it for so much; I may switch the second account to a current account that provides a switching bonus and then deplete it, but even then with both Santander accounts currently 'full' it is going to take quite some time till I'm totally out of the second Santander account and its 1.5% interest - with unfortunately no cash-back - (which actually I'll probably be quite happy with come November 1st!)

If I was in your (lucky) position, I'd be inclined to take both accounts together and compare the overall return with what else might be available, taking cash-back, interest and tax liability into account.

A spreadsheet would be helpful if you're into that kind of thing.

schiff

I've been very happy with my Fundsmith investments and I'll probably take more of that, ready to switch into ISA next April.