Removal of interest on Santander's 123 Student Current Account

Lightning360

It seems Santander is removing the "monthly interest of 1% AER/ gross (variable) on balances up to a maximum of £2,000" from the 12th of April where there will be no interest on balances.
1|2|3 Student Bank & Current Accounts - Santander UK
 Does anyone know why they have removed it completely rather than just lowered it?

jonesMUFCforever

Perhaps a business decision as Base rate is 0.01% and 1% is way over what savings account rates are at the moment.
Then there is the probability that 99.99% of students don't use the facility as they are overdrawn by the maximum interest free figure?

Zanderman

jonesMUFCforever said:

Perhaps a business decision as Base rate is 0.01% and 1% is way over what savings account rates are at the moment.
Then there is the probability that 99.99% of students don't use the facility as they are overdrawn by the maximum interest free figure?

If 99.99% of students don't use the facility you'd have thought there's no need to change the rate at all as it's rarely paid.

And, if it was my business (it isn't, obviously!) I'd keep the high interest rate to make the student account look attractive and build the student customer base, knowing that I've hardly anything to lose as 99.99% of student account holders never save anything so there'll be negligible interest to pay, despite the rate.

Lightning360

Zanderman said:

jonesMUFCforever said:

Perhaps a business decision as Base rate is 0.01% and 1% is way over what savings account rates are at the moment.
Then there is the probability that 99.99% of students don't use the facility as they are overdrawn by the maximum interest free figure?

If 99.99% of students don't use the facility you'd have thought there's no need to change the rate at all as it's rarely paid.

And, if it was my business (it isn't, obviously!) I'd keep the high interest rate to make the student account look attractive and build the student customer base, knowing that I've hardly anything to lose as 99.99% of student account holders never save anything so there'll be negligible interest to pay, despite the rate.

This is exactly what I wanted to write... but forgot to.
It also gives me no reason to keep my money with Santander. I'm planning on putting more of my money in other banks' savings accounts as they have better interest rates than Santander's savings accounts. The only reason to keep my Santander student account is for an overdraft I haven't used and likely won't (but I want to keep it just in case I need it).

Lightning360

Zanderman said:

jonesMUFCforever said:

Perhaps a business decision as Base rate is 0.01% and 1% is way over what savings account rates are at the moment.
Then there is the probability that 99.99% of students don't use the facility as they are overdrawn by the maximum interest free figure?

If 99.99% of students don't use the facility you'd have thought there's no need to change the rate at all as it's rarely paid.

And, if it was my business (it isn't, obviously!) I'd keep the high interest rate to make the student account look attractive and build the student customer base, knowing that I've hardly anything to lose as 99.99% of student account holders never save anything so there'll be negligible interest to pay, despite the rate.

It is even more of a selling point considering most student accounts don't earn interest on their deposits. TSB has 5% on deposits up to £500 and Halifax has 0.10%. It seems others don't. (According to the page on this site).