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

bristolleedsfan

smjxm09 wrote: »

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 opened a 5 year fixed ISA paying 1.88% 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.

.

Earlier in year you would have got 5 year non ISA fix at 3.0/3.10% - 5 year ISA fix at 2.6%

I am very glad I acted in February switching to a 5 year ISA fix at 2.6%

harz99

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.

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 opened a 5 year fixed ISA paying 1.88% 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.

We've done similar but not 5 years, a 2 year with Paragon and a 3 year with Vanquis. Before you close the Santander accounts maybe you could use one or both to switch to other ban ks and bag one or two switching bon uses?

smjxm09

Yes I have thought of that but thanks for the reminder. I did that by opening a M&S account last year so I will probably do it with First Direct.

KTF

3.x%+ is available from ratesetter at the moment.

bigadaj

KTF wrote: »

3.x%+ is available from ratesetter at the moment.

Or 12-14% from platforms with more transparency and security, the choice is yours.

KTF

bigadaj wrote: »

Or 12-14% from platforms with more transparency and security, the choice is yours.

Which ones are those?

Thrugelmir

minislim wrote: »

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

More likely to lose the customers they didn't want.

polymaff

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[...]%

True - for a non-tax-payer. 1.336% gross for a basic rate tax-payer.

bigadaj

KTF wrote: »

Which ones are those?

Money thing, Ablrate, Savingstream though the latter has lost some support.

Several others as well, have a read on the p2p independent forum.

KTF

bigadaj wrote: »

Money thing, Ablrate, Savingstream though the latter has lost some support.

Several others as well, have a read on the p2p independent forum.

Thanks. Will have a look at them.