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

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  • Graham1
    Graham1 Posts: 445 Forumite
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    eskbanker wrote: »
    I don't believe so - my expectation would be that interest would be accrued as usual based on the prevailing rate each day and paid on a pro rata basis when closing. Therefore it doesn't matter which date you close, you'd still earn at 3% up to 1 November and 1.5% thereafter....
    Provided you have the required 2 direct debits during the final partial month, yes, probably some people will lose out and get 0% in their final cycle through having insufficient DDs.
  • ic451uk
    ic451uk Posts: 30 Forumite
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    However, RCI accounts are not covered by FSCS, but by the French equivalent. That would be an issue for many of us who were affected by the Icelandic crisis

    True. The rules have been revised since Iceland. EU law requires that compensation be paid out within 20 working days. As a result of the plunge in the value of Sterling relative to the Euro the French scheme now covers £86,000, not the £75,000 of FSCS. I might think a little differently if RCI were Cypriot, Greek or even Italian!

    I see that Lloyds Banking Group lost no time in racing Santander to the bottom http://www.moneysavingexpert.com/news/banking/2016/08/lloyds-mulls-interest-rate-cut-on-top-current-accounts---are-you-affected.

    IC
  • littlemissbossy
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    VT82 wrote: »
    Really proper annoyed that they chose 1.5% instead of 2%. Ignoring the 1/2/3 symbolism offends my aesthetic sensitibilities for starters, and they fact that they probably have the disingenuous 'Bank Rate halved so we halved our rate' co ck and bull argument in their back pocket also riles me.

    My only cashback is about 40p a month on a mobile phone bill as all our household bills go out of a Halifax joint account, so I factor the £5 fee in full. At 2% I would have stayed, at 1.5%, I'll stick it in my Flexclusive ISA at 1.3% (including topping my waithdrawals from this year back up) for now. I know at some point in the future 1.5% even after fees will probably be a fair bit better than I can get on some of my savings, but for now, I'm so cross about the idea of paying £5 a month for the privilege of having a very mediocre savings account that I am going to have to ditch it for my own peace of mind :mad:


    I "think" the Flexclusive ISA rate is being cut too. :(
    Don't wait for your ship to come in, swim out to it.
  • polymaff
    polymaff Posts: 3,910 Forumite
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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.

    Tried that strategy five months ago. The return rate, so far, is just under 0.3% :(
  • asset2004
    asset2004 Posts: 2,453 Forumite
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    I "think" the Flexclusive ISA rate is being cut too. :(

    It's down to 0.95%.
    Not sure where to transfer to or to move my ISA to a Tesco savings account
    Life is a coin, you can spend it anyway you wish, but you can only spend it once.
    Go as far as you can see, and when you get there you'll see further.
    Take time but don't waste time
  • xylophone
    xylophone Posts: 44,851 Forumite
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    Not sure where to transfer to or to move my ISA to a Tesco savings account

    The rate is going down on savings accounts - do you have a couple of their current accounts already?

    http://www.thisismoney.co.uk/money/saving/article-1583864/Best-savings-rates-Isas-Cash-Isa-accounts-fixed-rate-Isas.html

    But rates seem to be diminishing daily so that using tables for easy access rates is becoming very difficult....
  • smjxm09
    smjxm09 Posts: 663 Forumite
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    edited 16 August 2016 at 4:04PM
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    The wife and I have an account each plus a joint account. Total investment is £60,000. We have also maxed out all other bank accounts paying interest so the question is what to do.

    The 3 Santander accounts cost us £180 in fees but earn £106 in cashback each year so we are £74 short which drops the 1.5% interest rate to a lower figure but I have no idea what to.

    I can only see interest paying bank accounts going one way and this is downwards and I can't see them recovering for a few years. With other savings rates also dropping I have decided to bite the bullet and go for a couple of 5 year deals. By the time they have matured hopefully things will be on the turn.

    I have opened a 5 year bond paying 2.1% with Vanquis paying monthly interest on £25,000. As my wife is not a tax paying she should get the full amount tax free. I have to fund this account within 30 days so I will wait until September.

    I have also opened a 5 year fixed ISA paying 1.88% for me with Shawbrook and will fund it with £15240 as I will be a tax payer from next April again. This account will also pay interest monthly.

    I have acted now as rates seem to drop every day so why wait. Combining the two I will be dropping from 3% interest minus fees to just about 2% guaranteed for 5 years which is somewhat better than what Santander will be offering.

    I will move all the direct debits from the 3 accounts into the joint account and close the other 2. This will then at least cover the £5 fee with an extra £3.83 cashback.
  • eskbanker
    eskbanker Posts: 31,958 Forumite
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    smjxm09 wrote: »
    The wife and I have an account each plus a joint account. Total investment is £60,000. We have also maxed out all other bank accounts paying interest so the question is what to do.

    The 3 Santander accounts cost us £180 in fees but earn £106 in cashback each year so we are £74 short which drops the 1.5% interest rate to a lower figure but I have no idea what to.
    Just to benchmark the starting point for your analysis, the £60K would earn £894 in interest at 1.5% AER (1.49% gross), so reducing that by your £74 shortfall is a return of £820 on £60K = 1.366666[...]%
  • colsten
    colsten Posts: 17,597 Forumite
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    eskbanker wrote: »
    Just to benchmark the starting point for your analysis, the £60K would earn £894 in interest at 1.5% AER (1.49% gross), so reducing that by your £74 shortfall is a return of £820 on £60K = 1.366666[...]%
    Before any tax that may well become due
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