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MSE News: Santander 123 rate to be slashed to 1.5%

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MSE_Luke
MSE_Luke Posts: 295 MSE Staff
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edited 14 August 2016 at 2:21PM in Budgeting & bank accounts
Santander 123 slashes interest in current account blow to millions - should you ditch it?...
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Santander 123 slashes interest in current account blow to millions - should you ditch it?
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  • minislim
    minislim Posts: 357 Forumite
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    well that's me leaving! have kept with them as i was just teetering on the edge of the stay or swap borderline.
    shame as they really had turned things around from the bad old days!

    it wasn't that long ago that they hiked the subscription to £5 per month. will this be dropping anytime soon?
    as i can see at least three family members all who have 123 accounts with them leaving too!

    think this might not be good for santander's business loosing so many customers!
  • kingrulzuk
    kingrulzuk Posts: 1,330 Forumite
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    I hope people start switching their accounts to other high interest paying banks
    What happens if you push this button?
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    minislim wrote: »
    well that's me leaving! have kept with them as i was just teetering on the edge of the stay or swap borderline.
    shame as they really had turned things around from the bad old days!

    it wasn't that long ago that they hiked the subscription to £5 per month. will this be dropping anytime soon?
    as i can see at least three family members all who have 123 accounts with them leaving too!

    think this might not be good for santander's business loosing so many customers!

    It's a loss leader anyway, don't think businesses care very much about individuals leaving and saving them money.
  • bigadaj
    bigadaj Posts: 11,531 Forumite
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    kingrulzuk wrote: »
    I hope people start switching their accounts to other high interest paying banks

    It was the worst option of the high interest cutting accounts before the change so you'd expect people to have filled the better options already.
  • 20aday
    20aday Posts: 2,610 Forumite
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    Now Santander have made their intentions official (after recent media speculation) I'd imagine other interest bearing current account providers might follow suit.

    Not only is it a kick in the teeth by halving the interest rate on balances up to £20,000 the overdraft fees increasing is a bit galling (for those who are always in it).
    It's not your credit score that counts, it's your credit history. Any replies are my own personal opinion and not a representation of my employer.
  • castle96
    castle96 Posts: 2,909 Forumite
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    Having filled everything else, wondering wha to do now (1/11)...
  • ic451uk
    ic451uk Posts: 30 Forumite
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    If keeping £20,000 in the account as a savings account, all other things being equal the November situation (ignoring tax and cashback) will be:
    Interest on £20,000 at 1.5% = £300, less £60 account fee = £240
    Interest on £20,000 in the top rate RCI account (1.2%) = £240
    Therefore, unless RCI drops its rate, the only difference between RCI and Santander is the cashback. However, if this is less than £5 per month, it may be better to go for the Halifax Reward current account (£5 per month reward subject to criteria).
    Therefore, I would suggest the following actions come November:
    Average more than £5 cashback per month? Stick with Santander.
    Are other high interest current accounts worth it (e.g. Club Lloyds) given they may well follow Santander's lead? Switch to the best one available at the time.
    Otherwise, put savings in RCI and open a Halifax Reward Account.

    IC
  • minislim
    minislim Posts: 357 Forumite
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    bigadaj wrote: »
    It's a loss leader anyway, don't think businesses care very much about individuals leaving and saving them money.

    it might have been a loss leader. but it attracted a lot of customers to switch to them

    but with them hiking the fee's wasn't that meant to cover the losses?

    anyway the loss of an individual probably wouldn't effect them much.

    but if customers leave in their droves (which i suspect they will) that will have an impact on them.

    i think its a bit shortsighted on santanders behalf as they had already hiked the fee's for this a while back.
  • KTF
    KTF Posts: 4,820 Forumite
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    castle96 wrote: »
    Having filled everything else, wondering wha to do now (1/11)...
    I have the same problem. There are no other high interest current accounts available for me to move it to.
  • Nationwide8
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    If you've exhausted all other higher interest current accounts and RSs I wonder at what point you start to consider Premium Bonds ?
    Of course PB are not a guaranteed win but the prize fund is supposed to be 1.25 % so on £20,000 = £250 with the chance you could win higher....and lower of course.
    If the £5 fee for Santander isn' t covered by cash back you will get £238...
    If fee covered you will get £298..

    Hmmm.....
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