Santander 123 Interest Reduction

booler

Hi all,


Forgive me if this has been discussed before.

I keep around £15K to £18K in a Santander 123 account, which gave me instant access and yielded 3% when I opened it. Soon after I opened it the interest was cut to 1.5% and it is now about to be further reduced to 1%.

I make about £25 per month from this in cashback and interest right now and this will be reduced after the change. I am not very good at assessing these things but I was wondering if anyone could advise if there is another account that would be better for me?

Thanks.

WillPS

Move the money to a normal savings account, Marcus is a name mentioned often.

If you benefit from the cashback on 1|2|3 currently downgrade it to 1|2|3 Lite, otherwise close it/switch it/downgrade to the no-fee account.

booler

I am getting roughly £5 per month in cash back and £20 in interest for a fee of £5 per month. How would the lite account compare to this?

soulsaver

booler wrote: »

I am getting roughly £5 per month in cash back and £20 in interest for a fee of £5 per month. How would the lite account compare to this?

So you transfer out the bulk of your cash to Marcus (1.35%) and get £0.70 interest pm more than Santander, based on your £20pm, after rate drop.

So gain £8.40 pa in interest (vs 1.0%) gain £48pa in fees (£1 vs £5), same cash back.

Needs some input from you to ensure you have funds in Santander ac at the right time to cover your cash back generating direct debits.

phillw

booler wrote: »

I am getting roughly £5 per month in cash back and £20 in interest for a fee of £5 per month. How would the lite account compare to this?

How roughly £5 a month? How many direct debits do you have?
4 direct debits paid from coop every month gets you £4
2 direct debits paid from barclays rewards account gets you £3 (£7 minus £4 monthly fee)
2 direct debits paid from halifax rewards account gets you £2

It doesn't matter what the values of the direct debits are. So if you have 8 direct debits you can make £9 instead of roughly £4 you will make from a 123 lite.

It sounds complicated, but move all your direct debits to the 1st of the month, install banking apps on your phone and it doesn't take much time at all. I keep a £0 balance on those three, the one to watch out for is halifax as the others text you on the day you go overdrawn, while Halifax now text you a week before the DD goes out that you're close to going overdrawn. However if you have the app installed then it gives you notifications of all payments in & out (although normally about six hours later). It's started telling me that my DD are higher or lower than normal as well.

They all have minimum deposits each month, but you can just transfer some money in and out on the same day. Some people do it automatically, I just have a single payee on them and do it manually from banking apps.

You can probably make cash transferring your account to one of these as well.

colsten

phillw wrote: »

It doesn't matter what the values of the direct debits are. So if you have 8 direct debits you can make £9 instead of roughly £4 you will make from a 123 lite.

It doesn't have to be an 'either or' if you can sort out some small, extra, DDs for Barclays / Coop / Halifax. So your total will be £13 a month. Only you can decide whether it's worth your while figuring out where to get these DDs. There's been plenty of hints and tips for this on the forum, mainly on the savings & investments board.