Martin Lewis says Santander 123 is now a dead duck current account as it cuts interest and cashback

robatwork

Ed-1 wrote: »

You can do it here:

https://www.santander.co.uk/personal/current-accounts/123-lite-current-account/transfer-123-lite-current-account

They won't let us downgrade our joint account without visiting a branch. Together. PITA.

ouraggie

Yesterday I received my letter from Santander advising of the imminent interest rate cut .
Spent yesterday pm stuck on a long rail journey with free wi-fi so did some perusing of old 123 statements and a bit of number crunching. Just posting my findings in case any of it might help anyone in a similar financial situation to myself.

I worked out that if I do nowt in April I will not be at all affected by the cashback £5 limits as it seems I only collect a total of £1.20, £2.91 and 75p each month in the 3 categories of cashback, or £4.86 mth/£58.32 pa.

In the last 12 months I kept the magic £20k or thereabouts in my 123 acct. I totted up the interest I earned in the last 12 months, which came to £281.72. Take off the £60 annual fee and that was £221.72 profit. Add on the £58.82 pa cashback I clocked up and that was a whopping £280.54 of free money!
I actually was quite shocked by the figure.

I then ascertained that I could actually leave a future balance of about £18,500 languishing in there and still stay below the new maximum interest of £199.09 pa.
But....interest of £199.09 + my £58.82 cashback - £60 fee = annual profit of only £197.91. There would be a laziness penalty for doing nothing - about £82.63 lost over a year.

I then did a bit of playing around on Martin's various savings calculators and discovered that:
1. £500 mth (i.e £6,000 total) paid into the Coventry's regular saver earns £80.94 in interest.
2. A further £200 mth (= £2,400) total paid into a 123 regular saver pays £32.16 in interest.
3. With Saffron B.S £250 mth (= £3,000) paid into a regular saver earns interest of £48.53.

£80.94 + £32.16 + £48.53 = £161.63 total interest.

Therefore I reckon I could keep my 123 account exactly as it is until 1st April, then downgrade it to a 123 lite. I still get my cashback of £58.82 pa but i now only pay £12 in account fees + I also have the combined interest of £161.63 from the 3 regular savers:
£58.82 + £161.63 = £220.45 - £12 fees = £208.45 annual profit. Annual "loss" is now only £72.09 instead of £82.63.

Forgot to mention that on 1st April I could remove £15k from the 123 account into some instant access savings account paying, say, 1.2% and this will feed my 3 regular savers over the year. That will pay another £106pa in interest while it's sat there waiting. The £5k remaining in the Lite account will pay all my monthly DDs for the year and I will still qualify for the 123 monthly offers and regular saver. I then repurpose one of my twoTesco current accounts as my main current account, clocking up clubcard points as I go.
£208 (see above) + £106 = £314 annual profit.
Well now, that is £34 more than i made last year. Whoopee. And don't forget all those extra clubcard points!

So now I just need to decide whether to take the £82.63pa loss on the chin, or to open yet another 4 accounts and make £34-and-a-few-clubcard-points more than i did before.

Decisions Decisions......

pinkdalek

If this is not giving advice then what is?

Quoted from HIS PAGE

Martin: 'Santander 123 is now a dead duck'

Martin Lewis, founder of MoneySavingExpert.com, said: "Santander 123 is now a dead duck current account. There's little reason for anyone to stick to it. In May it cuts interest to 1% – that's substantially less interest than the top-paying easy-access savings.

"Plus it's capping its cashback boon to £5 a tier (ie, £5 for each of the 1% level, 2% level and 3% level), limiting the max you can earn, though few will get close to that. The overall result is this account is easily beatable elsewhere.

"Simply shift your savings to the top easy-access account, currently paying 1.35%, and either grab over £100, free, shifting to a top current account, or move to the Santander 123 Lite account, where you pay just £1/mth for the same cashback.

colsten

pinkdalek wrote: »

If this is not giving advice then what is?

"Advice" has a very special meaning when it comes to financial advice. Neither Martin Lewis nor any of the MSE staff nor the forum posters ever give financial advice.

Colloquially, people would take the recommendations and suggestions as 'advice' but it really isn't. The most crucial difference between what you read on MSE, or what Martin Lewis says on TV, and financial advice is that you don't have any comeback if you choose to do what MSE "advise" and things go wrong for you. If you take proper financial advice, the adviser needs to firstly be on the FCA Register, and risks to be fined / struck off for bad advice.

As has been mentioned before, there are disclaimers all over MSE that say what you read here does not constitute financial advice.

eskbanker

pinkdalek wrote: »

If this is not giving advice then what is?

In the words of the FCA (in the context of investment), with the key characteristic bolded:

Typical differences between ‘advice’ and ‘guidance’

Advice

For these products, firms often use the term ‘advice’ to mean a ‘recommendation of what you should do’. For example, a recommendation to buy or sell a particular investment.

The recommendation is personal to you. It will be based on your specific circumstances and your financial objectives.

Only a firm that is authorised by us can provide this kind of advice. You can check which firms we regulate on the Financial Services Register. These firms must meet our consumer protection rules.

Guidance

‘Guidance’ is a much broader term and includes more general information about financial products.

Guidance can include information about different types of investments or general principles for you to consider when investing. It will not recommend a specific course of action to you or give a personal recommendation about how you should invest.

Guidance can help you understand the different investment options before you decide for yourself how to invest your money. Some people use it to narrow down their options before seeking advice.

Any organisation is allowed to offer guidance, including financial services firms. Public bodies such as the Pensions Advisory Service, Pension Wise, and the Money Advice Service also offer guidance. These public bodies do not sell financial products and services but provide general free, independent, and impartial financial information. See below for more information.

If you are unclear about whether an organisation is offering you advice or guidance please ask them for more information.

Hence MSE offers guidance not advice....

colsten

Worth adding, I think, that you will almost certainly not find anyone who actually gives advice about which current account to use. Even if a fully qualified financial adviser recommends a certain current account, they wouldn't do this as 'advice' but as a recommendation, or as a personal opinion.

roddydogs

Surely most of us will just carry on with 123, but keep a minimum in to pay dds, and put the rest in marcus, as some of us will still get 1.5% for a few more months. That is what im doing anyway.

colsten

roddydogs wrote: »

Surely most of us will just carry on with 123, but keep a minimum in to pay dds, and put the rest in marcus, as some of us will still get 1.5% for a few more months. That is what im doing anyway.

Some may, some won't. As a big full-fat 123 fan myself (I had 4 at one stage), I will be downgrading to 123 Lite myself when the interest drop happens.

The important bit for me is that everyone should decide by themselves what is best for their personal needs, and not just rush like lemmings because they have seen some sensationalist headline.

rizla01

For the past 4 years my money has been tied up in different accounts (2x 20k Santander Accounts) simply because i am waiting to move home when I eventually find what i am looking for, so I daren't do much else with my money simply because I need to know I can get at it when needed.

I already have the max with Marcus so I can only wait until a better product gets announced or, dream of ALL dreams, that house comes along, and I bet there are many that have found themselves in my shoes, thanks to the unmentionable 'B' word.

NoodleDoodleMan

They won't let us downgrade our joint account without visiting a branch. Together. PITA.

I did it over the 'phone, straightforward exercise.