Santander 123 loss of interest

nickcc

Just received the expected letter re the reduction in interest etc. Now looking for a better place for our money. Tried the comparison sites but not sure which way to go. Currently have two 123 accounts, one we top up to the max 20k and the other remains app 15k which we use for our everyday spending. State pension gets transferred into the 20k via a Lloyds current account and company pension gets paid in to the 15k account. We have three DD's out of the 20k account and app six out of the 15k account. Any constructive ideas would be welcome.

Rhino666

You could do better with interest rates even now before the drop to 1% as offset with the 123 account £5 monthly fee.
I would recommend dropping to one account that is used as a current account for direct debits, receipt of pensions, etc. Convert that to a 123 Lite account and keep it at a maintenance level. Use the upgrade option to keep account number, etc - account fee drops to £1 a month but no interest paid. Cashback is the same.
Shift all other money into the best interest paying instant access account. I find moneyfacts to be a good source of the best savings rates at a given time.

Zero_Sum

It staggers be why some people have 2 (or even 3 in some cases) of these accounts.
Even though the account itself actually isn't as good as the lite version I can understand why some opt for it for convenience. But for the 2nd account you're getting zero benefit of cashback on DD's so there's any amount of options that generate a better return after fees are accounted for

soulsaver

Zero_Sum wrote: »

It staggers be why some people have 2 (or even 3 in some cases) of these accounts.
Even though the account itself actually isn't as good as the lite version I can understand why some opt for it for convenience. But for the 2nd account you're getting zero benefit of cashback on DD's so there's any amount of options that generate a better return after fees are accounted for

You may well be right, but why would you assume that?

nickcc

The reason for having two 123 accounts is that interest is only payable up to 20k. The reason for having a seperate Lloyds current account is the requirement to have a minimum sum paid in to the second 123 account, having only one 123 account would mean loss of interest.

nickcc

Zero_Sum wrote: »

It staggers be why some people have 2 (or even 3 in some cases) of these accounts.
Even though the account itself actually isn't as good as the lite version I can understand why some opt for it for convenience. But for the 2nd account you're getting zero benefit of cashback on DD's so there's any amount of options that generate a better return after fees are accounted for

We do receive cash back on the second account.

YorkshireBoy

nickcc wrote: »

We do receive cash back on the second account.

The point being made is the cashback generating DDs could have been paid from just one 123 account and you'd have still made the same amount (subject to any category caps...were there any?).

By running 2 accounts you were probably effectively getting only 1.19% on the second account.

Zero_Sum

soulsaver wrote: »

You may well be right, but why would you assume that?

See Yorkshireboys comments above ^^^

nickcc

YorkshireBoy wrote: »

The point being made is the cashback generating DDs could have been paid from just one 123 account and you'd have still made the same amount (subject to any category caps...were there any?).

By running 2 accounts you were probably effectively getting only 1.19% on the second account.

I think you're missing the point. You only receive interest on the 123 account if you have a maximum of 20K anything more would earn no interest. As we have more than 20K we needed two 123 accounts so we could earn interest on both accounts.

Zero_Sum

nickcc wrote: »

I think you're missing the point. You only receive interest on the 123 account if you have a maximum of 20K anything more would earn no interest. As we have more than 20K we needed two 123 accounts so we could earn interest on both accounts.

Are you only allowed to put money into Santander?
Had you put the 2nd £20k in Marcus at 1.35% (could've had 1.5% had you done it 6 months ago) you'd be getting a larger return.

There was loads of options paying more than the 1.19% (net of fees) than you're currently getting.

I think it's you that's not quite getting it & missing point.

nickcc

Zero_Sum wrote: »

Are you only allowed to put money into Santander?
Had you put the 2nd £20k in Marcus at 1.35% (could've had 1.5% had you done it 6 months ago) you'd be getting a larger return.

There was loads of options paying more than the 1.19% (net of fees) than you're currently getting.

I think it's you that's not quite getting it & missing point.

Why do some posters have to turn a simple question into an argument. Please read my first post where I asked for advice as we would be switching from Santander. Some replies were saying that I didn't need more than one 123 account so I was pointing out that in fact I do.