A year ago Santander 123 halved its interest to 1.5% – now most should consider ditch

do163600

I think I'll be sitting tight, for now.

My cashback just about covers the monthly fee and I keep £20k in the account. I also have the regular saver at 5%.

I also have other Santander accounts, so it is useful to be able to transfer funds between them with ease.

I've already maxed out my ISA allowance for the year, so no gain there.

Hopefully Santander will see the light and raise their rate.

chelostar

I'll stick for now, as nothing currently pays better interest for easy access, than Santander. I shall keep a close eye on the interest rates though. I also took advantage of Clydesdale/Yorkshire free £250. It all helps in this dire time. Thanks as always for the alerts Mr MSE :T

phillw

RG2015 wrote: »

I have just calculated the benefit of downgrading to a 123 Lite account and transferring the £20,000 to a 1.30% easy access account is £10 per year.

If £10 is such a trifling amount for you, then please send paypal....

do163600 wrote: »

Hopefully Santander will see the light and raise their rate.

I think the problem is that they have seen the light and borrowing at 1.5% from their customers is too high a price to pay for them. They aren't a charity & base rate will probably have to rise quite a bit before the situation changes.

RG2015

phillw wrote: »

If £10 is such a trifling amount for you, then please send paypal....

My aim was to state the facts and to introduce some perspective into the debate.

However, now that you have raised the point I suspect that someone with £20,000 to spare may not be too concerned about losing 83 pence per month.

polyphonic99

We had 3 Santander 123 Accounts with 20K per account. Basically we used them for easy access savings. We ditched the 2 individual accounts back in August 2017, transferred all cashback DDs to the joint account, which we kept, the cashback pays more than the £5 per month fee. The money that was in the 2 individual accounts, each of us moved it to 3 x Bank of Scotland Vantage current accounts paying 2% on £5K and 1 x Lloyds Current Account also paying 2% on £5K, none of which have a fee if you pay in the monthly amounts, which you just circulate between the accounts.

Having the 4 BoS/LLoyds current accounts is a bit of a pain, but pays 2% on £20K each rather than the 1.5% less monthly fee (so 1.25%) from Santander. I very much doubt BoS/Lloyds will put up rates on current accounts after today's base rate rise, but we will probably stay with them until rates in normal saving accounts from other providers match them, when we will dump BoS/Lloyds and just go back to a hassle free simple savings account for our easy access money.

23rdian

It might not be worth the £10 etc difference to move but remember this is a current account so if you were to switch it, it would be worth considerably more

ericcollinson

You can't discount the 5% saver account,access to this via the 123 is the main point.Drip feed £200 a month into the 5% saver from the £5000 example in the table above makes £64.33 in the year,and the reducing balance at 1.5% earns approx' £55.50.The £75 in your table turns into nearly £120 ! nearly 2.4%. A couple drip feeding £200 each from a £5000 joint account earn £128.66 + £36 from the reducing balance turning your £75 into approx' £165 ! nearly 3.3%. Your 10k,15k and 20k columns all increase considerably with the above reasoning.

RG2015

ericcollinson wrote: »

You can't discount the 5% saver account,access to this via the 123 is the main point.Drip feed £200 a month into the 5% saver from the £5000 example in the table above makes £64.33 in the year,and the reducing balance at 1.5% earns approx' £55.50.The £75 in your table turns into nearly £120 ! nearly 2.4%. A couple drip feeding £200 each from a £5000 joint account earn £128.66 + £36 from the reducing balance turning your £75 into approx' £165 ! nearly 3.3%. Your 10k,15k and 20k columns all increase considerably with the above reasoning.

The point though is that you qualify for the 5% Santander regular saver with the Santander Lite 123 account which is only £1 per month instead of £5 per month for the full 123 account.

jflmutley

The numbers are interesting and useful but another major issue is quality of customer service and ease of access
Santander is on all my local high streets so can talk directly to people (not websites)
seems to be good customer service on telephones as well
if things go wrong and they do this is as valuable as anything else out there so should also be looked at
on balance santander ok for me but keep up these discussions the more we think about our actions the more we encourage companies to improve

ericcollinson

Yes.i agree,...but,with the Lite, you lose the 1.5% on the account balance.A couple with £20k in the Lite,both drip feeding £200 into their 5% savers would not get the £261 the balance earns,just the £129 ish from the saver accounts.That £261 easily covers the extra £48 the 123 account would cost.