Santander to slash 123 account interest and shake up overdrafts

JimmyTheWig

ColdIron wrote: »

Consider applying for an overdraft?

Surely the cost of using an overdraft would dwarf the interest earned by moving, say, £1000 into Marcus.

ColdIron

I arranged one but don't anticipate having to use it. It's a safety net. A pound a day if I recall. Beats having your DDs rejected and goes some way towards the worry of: 'persistently have to keep an eye on it as DH has a habit of withdrawing cash or hitting the debit card'

JimmyTheWig

ColdIron wrote: »

I arranged one but don't anticipate having to use it. It's a safety net. A pound a day if I recall. Beats having your DDs rejected and goes some way towards the worry of: 'persistently have to keep an eye on it as DH has a habit of withdrawing cash or hitting the debit card'

True. But so does leaving an extra £1000 in there.
Four days overdrawn (one incident, if you're not checking it daily) in a year and the overdraft has cost more than the difference in interest rate between 1.35% and 1.00%.

enthusiasticsaver

ColdIron wrote: »

Consider applying for an overdraft?

I would rather not have one. I have built in a small buffer and we have decided not to use it for general spending anymore.

soulsaver

Which bank pays 1.3% interest on upto £2m?
Allows multiple acs.?
Does standing orders?
Does DDs?
Easy access?

I wonder why nobody has suggested...
:clears throat:

PO bank could be a winner? :rotfl:

vigman

Please help, folks, I'm really lost, especially as I have serious health problems (apart from current pneumonia!)

We have three Santander 123 accounts. One joint and a sole account each. I keep these at £20k balance.

I have the requisite DDs on these and get cashback on a few bills.

I'm totally lost as what to do now. Even 1% seems 'good' in the current environment and is paid continuously. Changing to a new account as it has a switching reward doesn't seem to make sense as this is a one off payment?

So, please, why change to the Lite account with no monthly charge but no interest?

Is there a point at which I am actually losing money (rather than just getting less interest?)

With the complications of moving all DDs from Santander, and stopping three sets of qualifying money in/money out payments are there really much better options for us please than just staying with the accounts on full balance?

TIA

Vigman

JimmyTheWig

vigman wrote: »

With the complications of moving all DDs from Santander, and stopping three sets of qualifying money in/money out payments are there really much better options for us please than just staying with the accounts on full balance?

Simplistic answer for a single account. You could do this x3.

Scenario 1.
Stay as you are with £20k in the full-fat 123 account.
Interest on £20k at 1.00% = £200
Fees at £5/month = £60
Total = £140 a year

Scenario 2.
Switch to 123-lite, leave £2k in there and move £18k into Marcus @ 1.35% interest.
Interest on £18k at 1.35% = £243
Santander fees at £1/month = £12
Total = £231

So you stand to be £91 per year better off.

enthusiasticsaver

vigman wrote: »

Please help, folks, I'm really lost, especially as I have serious health problems (apart from current pneumonia!)

We have three Santander 123 accounts. One joint and a sole account each. I keep these at £20k balance.

I have the requisite DDs on these and get cashback on a few bills.

I'm totally lost as what to do now. Even 1% seems 'good' in the current environment and is paid continuously. Changing to a new account as it has a switching reward doesn't seem to make sense as this is a one off payment?

So, please, why change to the Lite account with no monthly charge but no interest?

Is there a point at which I am actually losing money (rather than just getting less interest?)

With the complications of moving all DDs from Santander, and stopping three sets of qualifying money in/money out payments are there really much better options for us please than just staying with the accounts on full balance?

TIA

Vigman

To make things easy for yourself you could move the whole £60k to Marcus split between you and your spouse. Downgrade the joint account with the direct debits to a Santander lite and close down the two sole accounts. Just put £500 in monthly to cover the direct debits and transfer any surplus out to the Marcus. Marcus pays 1.5%, the Santander lite charges you £1 fee and you get the same cashback as your account now just no interest but that is more than made up by the interest on Marcus without needing three Santander accounts and juggling direct debits and funding transfers. All direct debits out of the Santander lite. You can keep same details on account you leave open so you just need to move direct debits on 2 Santander 123 accounts which you close.

ColdIron

JimmyTheWig wrote: »

True. But so does leaving an extra £1000 in there.
Four days overdrawn (one incident, if you're not checking it daily) in a year and the overdraft has cost more than the difference in interest rate between 1.35% and 1.00%.

Yes, but it's more that just a comparison between 1.35% in Marcus and 1.00% in a full 123. Don't forget that £5 monthly fee. £1,000 will earn you £10 in interest but cost you £60 in charges. The suggestion was really to address the worry of a minimum balance in the Lite account (which enthusiasticsaver intends to move to). Same cashback for £1 so a saving of £48

Full fat 123 with £1,000: £10 in, £60 out, net -£50
123 Lite with minimum balance and £1,000 in Marcus: £0 in (Lite), £12 out, £13.50 in (Marcus), net +£1.50

The difference would pay for quite a few days overdraft and no worries with DD rejections

You could leave £1,000 in the Lite account but there's not much in it
123 Lite with £1,000: £0 in, £12 out, net -£12

Anyway, just food for thought

JimmyTheWig

ColdIron wrote: »

The suggestion was really to address the worry of a minimum balance in the Lite account (which enthusiasticsaver intends to move to).

Yes, you're right. So it would mean 4 overdraft incidents in the year for the break-even point rather than 1.