Santander 123 still a good saving option?

Bobblehat

While browsing through the Current Bank Account section and Savings section of the main MSE pages, I was puzzled by the lack of any mention of the Santander 123 current account paying 1.5% on up to £20,000. The penny dropped when I did the sums on the max £20,000 and took into account the £5 monthly fee and threw in a small amount of cashback ..... an Easy Access savings account paying 1.3% would beat it ..... just! :eek:

I already have most of the current top pick CA's and RS's maxed out and freeing up the DD's could open up other saving opportunities ...... 2nd or 3rd BOS .... etc.

So, your thoughts on keeping the Santander 123 account if I am mainly using it as a source of interest generated on a lump sum .... especially as the alternative savings accounts don't need DD's or minimum pay-in's and the trend at the moment is that there could soon be some higher than 1.3% Easy Access accounts appearing soon.

TIA

ColdIron

Touch and go I'd say. I'm hanging on to mine for now as the cashback just about makes it work for me and it is a handy account for SOs for regular savers and other account funding requirements but I'm sacrificing my second 123 for it's DDs which can be better used elsewhere now

badger09

Bobblehat wrote: »

While browsing through the Current Bank Account section and Savings section of the main MSE pages, I was puzzled by the lack of any mention of the Santander 123 current account paying 1.5% on up to £20,000. The penny dropped when I did the sums on the max £20,000 and took into account the £5 monthly fee and threw in a small amount of cashback ..... an Easy Access savings account paying 1.3% would beat it ..... just! :eek:

I already have most of the current top pick CA's and RS's maxed out and freeing up the DD's could open up other saving opportunities ...... 2nd or 3rd BOS .... etc.

So, your thoughts on keeping the Santander 123 account if I am mainly using it as a source of interest generated on a lump sum .... especially as the alternative savings accounts don't need DD's or minimum pay-in's and the trend at the moment is that there could soon be some higher than 1.3% Easy Access accounts appearing soon.

TIA

Have you considered downgrading to the Lite version? Keep the cashback, only £1 pm fee, and put the cash in the easy access account?

Neil_Jones

The main 123 account dropped out of favour a while back, the 1.5% rate is only before the £5 fee, which drops its net rate to around 1.2% IIRC.

When you look at it like that its pointless keeping it as a full account, get an easy access account paying 1.3% (check and test whether its faster payments first if you need that - otherwise expect the funds after 24hr wait) and Lite the Santander account for the direct debits and the cashback. At £1 a month you're already saving £48 just by Liteing it and gaining more in the 1.3% account (Which you'd be free to move elsewhere if rates creep up further!)

On the other hand if you just want a simple life, keep the regular account and run it as a savings and current account. It'll cost more but its convenient... swings and roundabouts either.

clivep

Between my wife and I, 6 x BOS 4 x Tesco and 2 x TSB took care of 45K of the 60K Santander balances.

2 x Santander a/cs used to get the switching bonus for TSB (now switched again to Coop). Remaining joint one converted to Lite until we qualified for Nationwide FlexDirect joint a/c again (with refer-a-friend incentives). NatWest a/c set up for cashback from DDs (when it was 3% rather than current 2% but still better than Santander).

40K into our ISAs 6 months ago in Old Mutual UK Mid Cap R Acc GBP is up 9%. This depleted some of the BOS savings so when they dropped the interest rate to 2%, 2 of the BOS a/c were switched to M&S and 2 to Nationwide Flexdirect a/cs (with refer-a-friend incentives).

Paul_DNAP

MSE Martin has just done a blog on this subject today - "A year ago Santander 123 halved its interest to 1.5% – now most should consider ditching it" - up on the main site now.


He's got a great table in there, £20k in Santander after the fee should earn £238, the same amount in the 1.3% saver should earn £260. So it's all down to if the cashback earns you anywhere near the £22 difference per year.

Bobblehat

Thank you all .... food for thought in all replies.

Paul_DNAP .... thanks for the heads up ..... pure coincidence I posted this today .....and the blog came out today too!

The other complication I have to doing all the sums is that I have 2 x Santander 123's but you can only have 1 x Santander RS. Just got to figure out if there is a combination that includes keeping one of the Santander's, whether Lite'd or not .... or ditch both to utilise the 4 X DD's to better effect. I'll do some doodling in Excel to see if one combination stands out and if it's all worth it!

george278

I always get over £7 cashback a month so the account is still a winner for me.

Rollinghome

Bobblehat wrote: »

The penny dropped when I did the sums on the max £20,000 and took into account the £5 monthly fee and threw in a small amount of cashback ..... an Easy Access savings account paying 1.3% would beat it ..... just! :eek:

Bear in mind too that the £5 fee has to be paid from cash that likely to have already been taxed and there's an assumption there's always the full £20k in the account. So much depends on the cashback and how big your utility bills are.

ColdIron wrote: »

Touch and go I'd say. I'm hanging on to mine for now as the cashback just about makes it work for me and it is a handy account for SOs for regular savers and other account funding requirements but I'm sacrificing my second 123 for it's DDs which can be better used elsewhere now

Me too. Found second accounts for myself and Mrs R were useful to have a big lump of cash instantly available but time to say thank-you and goodbye now.

badger09

ColdIron wrote: »

Touch and go I'd say. I'm hanging on to mine for now as the cashback just about makes it work for me and it is a handy account for SOs for regular savers and other account funding requirements but I'm sacrificing my second 123 for it's DDs which can be better used elsewhere now

I switched my 2nd 123 account in July. Not for any incentive,it just feels safer than closing it then mistakenly paying into it:o

I'm hanging on to the 'main' 123, as its feeding 9 regular savers and 2 current accounts. I also find it a useful home for maturing regular savers, and I can't be bothered working out a new system:(

ColdIron

It's the one account where I never have to worry about whether there's enough in it to cover the outgoings. I'll miss it for my credit cards which I plan to use elsewhere for the DDs, but no hurry just yet