Santander to slash 123 account interest and shake up overdrafts

harz99

eskbanker wrote: »

They'll obviously have factored in a higher level of customer attrition into their modelling so it's not as if this will come as a surprise to them!

There's a precedent here in their late 2016 halving of the 123 interest from 3% to 1.5%, which temporarily increased the quarterly numbers of outbound CASS switches from 21/22K up to 26/28K over the next two quarters before reverting to 21/22K, so they'll hardly be distraught about losing 11,000 of their circa 7 million accounts (about 0.15%) if the same pattern is repeated. Obviously not everyone choosing to walk away would do so via a CASS switch but the point remains that there's a huge difference between noisy indignation on here and actual impact on a bank's performance....

Very true, but the CASS data doesn't reflect the additional numbers of people who simply emptied and closed their 123 accounts, or those who kept them open as a main account but downgraded to Lite and drastically reduced the balance held on account which many of us will do now.

Makes me wonder if Santander are also now deliberately choosing to reduce their exposure in the UK post Brexit as well as saving money/increasing profit.

roddydogs

Nationwide has reduced rates to the bone, etc, have they lost custom because of that?

colsten

DavidT67 wrote: »

OK, so we have three Santander 123 'Full Fat' accounts with £20K each, which currently pay £900 interest per annum, no tax deducted as within our savings allowances and all over savings and investments are in tax wrappers.
Cashback on all accounts equals or exceeds £5 pm monthly fee. Also have two 123 regular savers currently earning £72 pa. So £972 pa total?

Post May, we would drop to £600 interest plus new regular savers earning £60, so £660 pa total.

MSE offers HSBC Advance account as alternative with switching bonus £175 x2, no interest, no cashback, HSBC regular savers at 2.75% , so new total would be £ 350 bonus plus £100 interest.

So at first glance it seems like sticking with 'Semi-Skimmed' 123 Select accounts is still better.
Am I missing something?

I guess if we reduced 123 balances to £5K each to cover monthly outgoings and moved £45K emergency fund to a savings account at 1.35% we would gain around £150 pa interest compared to leaving it all at Santander. A bit more effort for a marginal gain.

Your HSBC RS accounts would only take £6k of your £60k, and only in small instalments. Where would you keep the other £54k? where would you keep the £6k for dripfeeding?

Surely the HSBC switching bonuses, and keeping some of your money in 2.75% accounts, as opposed to in 1.5% ones, will yield more than keeping everything in 1% accounts? Although it is possible that HSBC may or may not accept you for Advance, so the £175 switching bonuses may not materialise, and I wouldn't take them as a given until I actually had them.

eskbanker

harz99 wrote: »

Very true, but the CASS data doesn't reflect the additional numbers of people who simply emptied and closed their 123 accounts, or those who kept them open as a main account but downgraded to Lite and drastically reduced the balance held on account which many of us will do now.

Makes me wonder if Santander are also now deliberately choosing to reduce their exposure in the UK post Brexit as well as saving money/increasing profit.

Agreed that the CASS data only paints part of the picture, but I'm still of the opinion that this is a routine business decision, the consequences of which will have been properly thought through and analysed, and not some inadvertent shooting themselves in the foot, i.e. they'll have modelled the number of customers withdrawing funds or accounts.

Likewise I doubt that it signifies any wider corporate strategy, Brexit-related or otherwise, but your very last point seems an obvious one to me, i.e. that they'll be doing this for (perfectly legitimate) commercial reasons.

Jackmydad

Looks like a change to "Lite" for us.
Find somewhere else for our "float"

enthusiasticsaver

colsten wrote: »

It's 1.5% for me, regardless of how much I have in the account, as my cashback always reliably pays the account fee. Yes, I know I would get the same amount of cashback for £4/mth less but then I'd get 0% interest on some fairly large amounts and/or would have to manually refill several times a month, and still I'd be at permanent risk of going overdrawn, particularly when the monthly credit card bills hit. With the new overdraft charges, avoiding overdrafts becomes even more important to me. I'll continue to use the full-fat 123 when they drop the rate, albeit with a permanently reduced max balance.

Yes we are in the same position. It is our main current account and I don't feel comfortable only leaving enough in there to cover direct debits and will persistently have to keep an eye on it as DH has a habit of withdrawing cash or hitting the debit card. I think I have decided to move our emergency savings and saving envelopes for holidays/car/gifts and house into our Marcus savings accounts downgrade to the Santander 123 Lite and just transfer the surplus every month into Marcus. I might also increase our personal allowances into our sole accounts and tell DH Santander is now only for direct debits and no spends to come out of it so I only have to think about my spends.

ColdIron

enthusiasticsaver wrote: »

It is our main current account and I don't feel comfortable only leaving enough in there to cover direct debits and will persistently have to keep an eye on it as DH has a habit of withdrawing cash or hitting the debit card.

Consider applying for an overdraft?

Yorkshire_Pud

Although I moved to the lite account a while ago the beauty of the full fat version was and in a way still is that you get some interest on a high balance that covers DDs but also lots of regular saver standing orders so just needs topping up monthly but there was always that comfort margin.

Now I have to be mindfull of going overdrawn all the time on about three current accounts as I don't want to lose interest on a higher balance. So for £5 a month peace of mind and if I did come unstuck and get into overdraft, has happened once cost £1 but shows it can happen, the charges would make the £5 charge look very reasonable.

So a full fat with a lower working balance can make sense as colsten says.

Funny how Martin always creates a false urgency to churn accounts movement! Wonder why? Who cares? Take your time. What's to stop other banks reducing their rates soon? Then its hey Santander 123 full fat is the best option out there today!! (But maybe not tomorrow, contin. Page 94)

Neil_Jones

Yorkshire_Pud wrote: »

Funny how Martin always creates a false urgency to churn accounts movement! Wonder why? Who cares? Take your time. What's to stop other banks reducing their rates soon? Then its hey Santander 123 full fat is the best option out there today!! (But maybe not tomorrow, contin. Page 94)

If people don't move now when the news is fresh in their mind then they're not going to move when a gentle reminder in the newsletter in late April crops up.

molerat

I remember the good old days of a £2 fee and £50 interest a month