Santander 123 vs Lite, are my sums right?

soulsaver

crumpetman wrote: »

But you are going to have some money sitting in the lite account earning zero interest. If you average higher than £3k then you may as well have the full 123 account as you will be no worse off compared to lite plus Marcus.

Eh? £3k @ 1,5 % = £45 pa.. less £60 fees = minus £15 pa.

And like he said just a few posts up...

eskbanker wrote: »

No, that doesn't matter, because in the Lite scenario being discussed, that £3K would be earning 1.5% in a separate easy-access savings account like Marcus, thereby achieving the same interest as a full-function 1-2-3 but without the extra fee.

And you can avoid the lite fee..

crumpetman

If you don't pay the £1 fee on the lite account it means you are not earning cashback so why bother with that account?

The question the OP asked was whether it is worth switching from 1|2|3 account to a lite account, thus saving £48 per year in fees whilst still earning cashback on DDs.

I am trying to work out the point at which it becomes worthwhile to keep the 1|2|3 account because I find it very difficult to maintain a close to zero balance in my current account. I have many bills (sometimes large) to paid each month plus standing orders for savings accounts. I tend to keep in excess of £3k in my current account. Some of the responses above assume there is going to be close to zero balance in the lite account, remember you earn zero interest for any money in the lite account.

If I were to switch to a lite account but keep £3k in it then I would earn zero interest on that £3k. The rest of my savings could be in a Marcus account but as I am earning zero on the £3k in the lite account I think it is easier to keep the 1|2|3 account and leave the savings in there. Total interest for the year minus fees is going to be about the same as using the lite (with £3k in it) plus Marcus or similar savings account.

Edit: I think the cutover point for me is £3.2k, i.e.

£10k in 1|2|3 account earning interest of £150 minus £60 fee is £90
or
£3.2k in lite account earning zero interest but fee of £12
and
£6.8k in Marcus earning £102 interest, then minus the £12 lite fee equals £90 per year

soulsaver

crumpetman wrote: »

If you don't pay the £1 fee on the lite account it means you are not earning cashback so why bother with that account?

To get the reg saver perhaps..

crumpetman wrote: »

The question the OP asked was whether it is worth switching from 1|2|3 account to a lite account, thus saving £48 per year in fees whilst still earning cashback on DDs.

Have another guess - OP didn't mention DDs or cashback.

crumpetman wrote: »

I am trying to work out the point at which it becomes worthwhile to keep the 1|2|3 account because I find it very difficult to maintain a close to zero balance in my current account.

Maybe start your own thread then.:)

crumpetman

True they did not mention cashback but the title is Santander vs Lite. I have made the assumption that they are receiving cashback on the DDs. If no cashback on bills then don't bother with either account.

The way the OPs question is worded makes it look they think they will be better off to change to a Lite account but they have ignored the £1 per month fee and zero interest.

Zero_Sum

crumpetman wrote: »

But you are going to have some money sitting in the lite account earning zero interest. If you average higher than £3k then you may as well have the full 123 account as you will be no worse off compared to lite plus Marcus.

If you have less than £3k in the current account then lite plus Marcus works out better

Why would you need that level of cash in the account? All you really needs to keep in the amount which covers the DD's that earn cashback which wouldnt be more than £300 ish (unless you have a santander mortgage which would be a bit more). Open a Tesco one (or 2) & get 3% interest. I cant think of any situation where the full 123 account is worth having.

surreysaver

I switched my 123 to the Lite version about a year ago. I also have a Santander mortgage, so pay £1k a month into that to earn the maximum cashback. Its a flexible offset mortgage, so I can take my overpayment straight back out if I want.

crumpetman

I have two Tesco and two TSB already (so does my wife) from ages ago, with no DD requirement.


From which account should I pay all my non cashback earning DDs? Mortgage plus credit cards (mine and wifes) can be £2k plus a month. I could pay them out of the Tesco and TSB accounts but then I'd have to top them up each month. Likewise I could use the BOS and have three of those.


To split all the DDs to different accounts and close the 1|2|3 I would at best save £4 per month but I would have quite a bit more admin and the worry that an account might not have enough in it to cover a big bill.

RG2015

crumpetman wrote: »

To split all the DDs to different accounts and close the 1|2|3 I would at best save £4 per month but I would have quite a bit more admin and the worry that an account might not have enough in it to cover a big bill.

Yes, I know exactly what you mean and I kept my full 123 until yesterday. But the lure of 1.5% at Marcus was too much and I downgraded to 123 Lite.

It will involve more maintenance to make sure that the balance is kept very low but always enough to cover the regular payments.

I hope that Marcus being down today is just a teething blip and that it will be fine when I actually need to draw on it.

It is good to know though that changing back from Lite to full 123 is also an easy process if the benefits change to make it more appealing.

ColdIron

RG2015 wrote: »

It will involve more maintenance to make sure that the balance is kept very low but always enough to cover the regular payments.

I will be downgrading to the Lite account as soon as my interest has been paid on the 12th. I plan to maintain a balance of £0 and administer it by standing order but to avoid any possibility of failed payments and for an easy life I applied for, and was accepted for, an overdraft of few hundred quid. Might be an option for you

YorkshireBoy

ColdIron wrote: »

I will be downgrading to the Lite account as soon as my interest has been paid on the 12th. I plan to maintain a balance of £0 and administer it by standing order but to avoid any possibility of failed payments and for an easy life I applied for, and was accepted for, an overdraft of few hundred quid. Might be an option for you

I'm doing the same, but a day earlier.

I've had a £10K O/D facility since I opened the account years ago, and I'll need most of it should I forget to fund for the 1st of the month regular saver SO run, and 5th of the month utility DDs! I'll probably leave a £201 balance so I don't have to fund again a fortnight later for the 123 regular saver.