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

MSE_Helen_S

This is the discussion to link on the back of Martin's blog. Please read the blog first, as this discussion follows it.

Read Martin's "Santander 123 to slash interest to 1.5% – should you ditch it?" Blog.

Please click 'post reply' to discuss below.

swilsco

With the slash to 1.5%, maybe now is the time to increase the mortgage overpayments (depending on your mortgage rate) over and above what you may or may not already be doing.

liverbearofdeal

I have just over 20K of savings and still want easy access. I currently have a Halifax current account and want to keep that. I don't have a Santander account but was considering opening one to put the savings in before the news that they were slashing interest rates. Will it still be the best deal for me even after the rate cut?

micawber2

It was great while it lasted. I have just cashed out now (before the letters hit the doormats) rather than run the risk of a run on the bank and the unknown timescales of compensation through the deposit guarantee scheme.

michaels

What a surprise, for big savers you end up with a fraction more with the 1-2-3 than the best paying instant access savings account....

With all the cuts in savings interest rates so far we will be 3.5k worse off this tax year than last.

Santander see me as a 'select' customer as a result of my savings balance but won't of course enter into any discussion on the 5% erc on my mortgage with them.

Brand

liverbearofdeal wrote: »

I have just over 20K of savings and still want easy access. I currently have a Halifax current account and want to keep that. I don't have a Santander account but was considering opening one to put the savings in before the news that they were slashing interest rates. Will it still be the best deal for me even after the rate cut?

You have to consider a nearest alternative, and if you can get 1% on an easy access no-strings savings account, then the advantage of Santander 1-2-3, is only 0.5% pa of your savings (£20k) £100 minus the £60 pa fee. Your return for the strings is thus £40 pa

A_Flock_Of_Sheep

The start of the great Current Account gravy train derailment.

epm-84

I get interest and cashback (and get charged the monthly fee) on the 10th of the month. If I were to close the account on the 11th November would I get charged the monthly fee for November to December?

epm-84

Brand wrote: »

You have to consider a nearest alternative, and if you can get 1% on an easy access no-strings savings account, then the advantage of Santander 1-2-3, is only 0.5% pa of your savings (£20k) £100 minus the £60 pa fee. Your return for the strings is thus £40 pa

Virgin Money Defined ESaver offers 1.16% interest. (Although you are limited to the number of withdrawals you can make per year.) Santander's 1.5% rate is equivalent to 1.2% on an average balance of £20,000 over 12 months after you take the monthly fee in to account. Whether the Virgin Money Defined ESaver is a better option for your savings than a Santander current account depends on your average balance and how many withdrawals you are likely to make.

If you get a lot of cashback but not much interest you have to consider whether the 123 Lite is a better option.

chrismale

I have just made a complaint from within my Santander account - if we all do this maybe we can get the monthly fee reduced! I complained as follows:'
I am very upset to learn that Santander is going to halve the 3% interest rate on my 123 account. Bank rate was only reduced by 0.25% so this does not justify your reducing this by 1 1/2%. At the very least, if you are halving the interest rate you should also halve the £5 monthly charge to £2.50.'

Consumerist

Well, running the numbers through a spreadsheet, my cash-back doesn't cover the £60 fee and I only need a little over 1% from an ISA to break-even with the 1.5% rate from November.

So, for me at the moment, it looks like the Santander123 Lite for my direct debits and loose change then most of the rest in an ISA. This plan could, of course, change within the hour.