UPDATED: Santander 123 to slash interest to 1.5% – should you ditch it?

realaledrinker

Currently in Spain where central bank rates are lower than in the UK and I note the 123 account pays 3% up to €15,000 so that seems a more likely approach - reduce the maximum on which 3% is paid. Reducing the top rate would destroy the brand

Consumerist

jimbo49 wrote: »

i think what Santander is (probably) going to do is right out of order! . .

Personally, I have been surprised that Santander has kept its 3% rate for so long. Something like this was bound to happen sooner or later and I think it's been later rather than sooner.

As is ever the case with MSE, we'll make the most of whatever the banks throw at us.

I get some satisfaction that those cleverdick banks who decided to link credit-card interest rates to BoE Base Rate are going to lose a few coppers if Base Rate goes down.

jimbo49

what is so annoying is that they already increased the fees by an outrageous amount and are still not satisfied! if there was any justification, like the outfit was going to fail, it would be better accepted, but when there is no other reason for this than pure greed, it cannot be justified at all!!

Consumerist

realaledrinker wrote: »

Currently in Spain where central bank rates are lower than in the UK and I note the 123 account pays 3% up to €15,000 so that seems a more likely approach - reduce the maximum on which 3% is paid. Reducing the top rate would destroy the brand

I think the effect of such a move would be minimal for the bank. How many, do you suppose, have got anything like £20k in savings?

CraigPP

I think Santander will have to stick with the 1%, 2%, 3% otherwise the whole account concept stops making sense. They will probably change the interest rate bands into £5K chunks, take away the minimum balance for interest to be paid and reduce the upper limit. So: 1% for £0 to £4999, 2% for £5,000 to £9,999 and 3% for £10,000 to £15,000. They could also cut the fee to £4pm to make these changes more palatable but I doubt they will do that.

Consumerist

CraigPP wrote: »

I think Santander will have to stick with the 1%, 2%, 3% otherwise the whole account concept stops making sense. They will probably change the interest rate bands into £5K chunks, take away the minimum balance for interest to be paid and reduce the upper limit. So: 1% for £0 to £4999, 2% for £5,000 to £9,999 and 3% for £10,000 to £15,000. They could also cut the fee to £4pm to make these changes more palatable but I doubt they will do that.

Hi CraigPP and welcome to the forum.

Your thoughts seem quite specific; do you have some inside information? We often learn a lot this way by reading between the lines of a bank's thinking..

CraigPP

Unfortunately I don't have any inside knowledge, I don't work in finance anymore. I'm waiting for Santander (and their competitors) to announce what is going to change before deciding whether I need to open even more bank accounts to keep maximising my returns. I've already got other accounts with Lloyds, TSB, Bank of Scotland, Tesco etc... and doubtless they will also be changing their offerings soon!

Consumerist

CraigPP wrote: »

Unfortunately I don't have any inside knowledge, I don't work in finance anymore. I'm waiting for Santander (and their competitors) to announce what is going to change before deciding whether I need to open even more bank accounts to keep maximising my returns. I've already got other accounts with Lloyds, TSB, Bank of Scotland, Tesco etc... and doubtless they will also be changing their offerings soon!

. . . and since they are all likely to announce and implement their intended changes at different times, it's going to be something of a nightmare for us, their customers,to decide when and where to jump.