Santander 123, still worth it?

t8769

Everything changes after may 2020, but you still get up to £15 in cashback (£5 for each tier of cashback) as well as 1% up to £20,000 cash in current account. 
At the cost of £5mo.
Is this still a good deal or are there better ones out there?

afis1904

You get the same cashback on the lite account and there's a list of savings accounts that offer higher interest.

YorkshireBoy

t8769 said:

Everything changes after may 2020, but you still get up to £15 in cashback (£5 for each tier of cashback) as well as 1% up to £20,000 cash in current account. 
At the cost of £5mo.
Is this still a good deal or are there better ones out there?

It hasn't been a good deal for a while now (for most people), not just because the rate is dropping in May. Unless, for ease and simplicity (at a cost of £48 per year), you were funding multiple regular savers, you'd have been better going to Lite when Marcus launched their 1.5% savings account around 18 months ago.

t8769

Thanks for the info.
But with 123 you still get £120pa profit on cashback, after paying the monthly fee, and 1% on cash, which is better than any other current account I've seen.
So you'll save £4mo with Lite but no 1% interest on your cash.

Is this correct?

Thanks

RG2015

This is correct.
The full 123 gives up to £120 profit compared with the 123 Lite which gives up to £168. £20,000 will earn £200 at 1% compared with £260 in a Marcus savings account. Marcus also offer faster payments which are always within a couple of minutes for me.

The downside is that there will be no interest earned on any balance in the 123 Lite account and the balance will need to be managed to fund the direct debits.

colsten

t8769 said:

Thanks for the info.
But with 123 you still get £120pa profit on cashback, after paying the monthly fee, and 1% on cash, which is better than any other current account I've seen.

Cashback can be ignored in your considerations as you get the same on the 123 Lite as on the 123 full fat. It's only of interest if you compare the 123s with current accounts from other providers. Though there's not much that would stop you from getting cashback from Santander as well as the monthly reward payments from the COOP, from Barclays and from Halifax  (at least an additional £9 a month in total from these). Natwest/RBS/Ulster aren't a contender IMO.

There are still other current accounts that pay more than 1% interest, and there are obviously also instant access savings accounts that pay more than 1%. Given that it is easy and fast to transfer money from an instant access savings account to your linked current account, there's no reason why they are not an excellent alternative for keeping those savings you want to have instant access to.

What you choose to do is clearly up to you. A lot depends on how much money you have, how much of it should sensibly sit in a current account at all times, and how many other accounts you have access to (some people have several 3% [1.5%] TSB Plus accounts, for example, from when it was still possible to get several).

If, for instance, you have £20k but only spend (and replace) around £5k each month, keeping more than £5k in your 123 full fat would not be very MSE, as you can see from example 1 below.

You need to work out your own figures to decide what makes best sense for you. It is possible that a full fat one costs you less than a Lite one (example 2 below). 

EXAMPLE 1

EXAMPLE 2

t8769

That's great information!

Thank you
most helpful 

Tildaplum

Also complicated by the fact that if you already have £1000 pa of savings interest, then you pay tax on the Santander interest but cannot claim the tax back on the monthly fee which then rises to an effective rate of £5 /0.8 for basic rate payers.

t8769

Interesting
I looked at the Halifax reward account which is £2mo, but one can only et £60pa in cashback and 0.5% interest on cash. 

colsten

Tildaplum said:

Also complicated by the fact that if you already have £1000 pa of savings interest, then you pay tax on the Santander interest but cannot claim the tax back on the monthly fee which then rises to an effective rate of £5 /0.8 for basic rate payers.

Personal figures will obviously change if you have to pay tax on some of your savings interest. If you are likely to get over the £1,000 (or the £500) allowance by using the top interest paying accounts, you might be better off keeping more of your cash in a lower interest paying account, or shifting more into one or more ISAs, or sticking some of your money into Premium Bonds and pray. Nice problem to have, in any case. Most BR tax payers can only dream of making more than £1,000 a year in interest these days.