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Santander 123 still best savings account ?

edited 30 November -1 at 1:00AM in Budgeting & Bank Accounts
126 replies 15.4K views
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  • edited 9 October 2018 at 1:02PM
    RG2015RG2015 Forumite
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    edited 9 October 2018 at 1:02PM
    hubb wrote: »
    I have just opened a Marcus account but looking at what I have eared in interest at Santander I really don't think it worth moving. The Marcus 1.5% interest includes the bonus indtroductary of 0.15% for first 12 months, which will drop back down again. Santander stays at 1.5%. Having around 19k I earned £26 interest in the last month, even with the £5 fee (which I earn £3 of that back in cashback) it still beats Marcus.
    Nobody knows what rate of interest either Marcus or Santander will be paying in 12 months time. All we know is that both are currently paying 1.50% AER and that Santander is charging £4 per month for the privilege of earning that 1.50% whilst Marcus is not.
  • YorkshireBoyYorkshireBoy Forumite
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    hubb wrote: »
    I have just opened a Marcus account but looking at what I have eared in interest at Santander I really don't think it worth moving. The Marcus 1.5% interest includes the bonus indtroductary of 0.15% for first 12 months, which will drop back down again. Santander stays at 1.5%. Having around 19k I earned £26 interest in the last month, even with the £5 fee (which I earn £3 of that back in cashback) it still beats Marcus.
    £19,000 x 1.5% = £285
    Less £60 fee = £225
    Plus £36 cash back = £261

    Return = £261 / £19,000 x 100 = 1.37%

    Marcus pays 1.5%

    So the return on Marcus is higher than Santander 123, unsurprisingly.

    £19,000 x 0.13% = £24.70 per year more.

    Switch to Lite and the return is now £72.70 per year more.

    Both could cut their rates. One of them probably will...but which one?
  • enthusiasticsaverenthusiasticsaver Forumite, Board Guide
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    We have a Santander 123 fully funded and earn around £9 cashback each month so a £4 profit per month on the fee. That makes it worthwhile keeping it. If the fee is not covered by cashback I would look elsewhere.
    Early retired in December 2017

    I'm a Board Guide on the Debt-Free Wannabe, Mortgages and Endowments, Banking and Budgeting boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Any views are mine and not the official line of moneysavingexpert.com. Pease remember, board guides don't read every post. If you spot an illegal or inappropriate post then please report it to [email protected]
  • ZandermanZanderman Forumite
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    We have a Santander 123 fully funded and earn around £9 cashback each month so a £4 profit per month on the fee. That makes it worthwhile keeping it. If the fee is not covered by cashback I would look elsewhere.

    If the 20k was in marcus and you switched the 123 to 123 lite - topping it up to cover the DDs each month, you'd still be making £9 cashback but it would be an £8 profit per month on the fee.
  • soulsaversoulsaver Forumite
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    We have a Santander 123 fully funded and earn around £9 cashback each month so a £4 profit per month on the fee. That makes it worthwhile keeping it. If the fee is not covered by cashback I would look elsewhere.

    Does it?
    Go to 123 lite - you still get the cash back, and save £48 pa in fees.
    Get the 1.5% from Marcus.
  • Zero_SumZero_Sum Forumite
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    We have a Santander 123 fully funded and earn around £9 cashback each month so a £4 profit per month on the fee. That makes it worthwhile keeping it. If the fee is not covered by cashback I would look elsewhere.

    And youd make £8 profit on 123 lite account.
  • polymaffpolymaff Forumite
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    Don't forget that the additional £48 pa fee comes out of your nett income - making Santander 123 look even worse :)
  • tg99tg99 Forumite
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    I’ve got two 123 accounts each with £20k, one of which is used as my main banking hub for everything and the second purely for savings. Only thing making me think twice about closing the second one is the terms and conditions preventing customers from having more than one (I opened the second one not long before they introduced this restriction). If Santander react to the rate increases elsewhere by increasing the rate from 1.5% or cutting the £5pm fee then in theory I would not be able to open a second one again (presuming they actually adhere to the restriction though!). Not convinced this is terribly likely however, at least until rates get high enough that there is a more significant difference between the effective net rate from Santander and that earned from the best paying easy access accounts. And even then it’s questionable whether they would act unless they had significant numbers of customers leaving. I could wait until say early in 2019 and if nothing has changed then remove the second account at that point. Then again I think I might just get on with doing it now as even if say Santander scrapped the £5 fee entirely (unlikely) then the 1.5% is still no better than Marcus and Bank of Cyprus.
  • Zero_SumZero_Sum Forumite
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    tg99 wrote: »
    I’ve got two 123 accounts each with £20k, one of which is used as my main banking hub for everything and the second purely for savings. Only thing making me think twice about closing the second one is the terms and conditions preventing customers from having more than one (I opened the second one not long before they introduced this restriction). If Santander react to the rate increases elsewhere by increasing the rate from 1.5% or cutting the £5pm fee then in theory I would not be able to open a second one again (presuming they actually adhere to the restriction though!). Not convinced this is terribly likely however, at least until rates get high enough that there is a more significant difference between the effective net rate from Santander and that earned from the best paying easy access accounts. And even then it’s questionable whether they would act unless they had significant numbers of customers leaving. I could wait until say early in 2019 and if nothing has changed then remove the second account at that point. Then again I think I might just get on with doing it now as even if say Santander scrapped the £5 fee entirely (unlikely) then the 1.5% is still no better than Marcus and Bank of Cyprus.

    Why do you need £40k instant access?
    You can get 1.6% for 6 months fixed or 2% 1 year fixed.
    Accross Tsb/tesco/nationwide ive got £10k paying average 3.8%
  • tg99tg99 Forumite
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    Zero_Sum wrote: »
    Why do you need £40k instant access?
    You can get 1.6% for 6 months fixed or 2% 1 year fixed.
    Accross Tsb/tesco/nationwide ive got £10k paying average 3.8%

    I have various sizeable outgoings each month eg loads of Reg savers plus into shares/funds etc which I also like to be able to do opportunistically which cannot do if money is tied up in fixed accounts. I already have all the current accounts paying good interest like Tesco, TSB etc.
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