Santander 123 rises to 1.5%

steffangl

Daliah said:

Don't forget it costs £4 a month.

This effectively reduces the interest rate to 1.26% on an account that is fully loaded with £20k all the time. That's a little over half of the currently best instant access rate. If you keep less in the account, the 123 interest rate is even worse.

Probably more fair to say it effectively costs £2 a month (as the Lite is £2 covering the cashback element).
That would then make it 1.38% with the full 20k in the account.
But yes, you're absolutely right - still less than other easy access savings accounts available.
You'd think they'd offer some other benefits of going for the full 123 over Lite.

Daliah

steffangl said:

Daliah said:

Don't forget it costs £4 a month.

This effectively reduces the interest rate to 1.26% on an account that is fully loaded with £20k all the time. That's a little over half of the currently best instant access rate. If you keep less in the account, the 123 interest rate is even worse.

Probably more fair to say it effectively costs £2 a month (as the Lite is £2 covering the cashback element).
That would then make it 1.38% with the full 20k in the account.
But yes, you're absolutely right - still less than other easy access savings accounts available.
You'd think they'd offer some other benefits of going for the full 123 over Lite.

You don't get any interest on the 123 that costs £2 a month

Astria

steffangl said:

Daliah said:

Don't forget it costs £4 a month.

This effectively reduces the interest rate to 1.26% on an account that is fully loaded with £20k all the time. That's a little over half of the currently best instant access rate. If you keep less in the account, the 123 interest rate is even worse.

Probably more fair to say it effectively costs £2 a month (as the Lite is £2 covering the cashback element).
That would then make it 1.38% with the full 20k in the account.
But yes, you're absolutely right - still less than other easy access savings accounts available.
You'd think they'd offer some other benefits of going for the full 123 over Lite.

doesn't £2000 break even on the 123 'full' account? Meaning that if you keep anything over that in the account then it's effectively worth the £2/month extra.

Daliah

Astria said:

steffangl said:

Daliah said:

Don't forget it costs £4 a month.

This effectively reduces the interest rate to 1.26% on an account that is fully loaded with £20k all the time. That's a little over half of the currently best instant access rate. If you keep less in the account, the 123 interest rate is even worse.

Probably more fair to say it effectively costs £2 a month (as the Lite is £2 covering the cashback element).
That would then make it 1.38% with the full 20k in the account.
But yes, you're absolutely right - still less than other easy access savings accounts available.
You'd think they'd offer some other benefits of going for the full 123 over Lite.

doesn't £2000 break even on the 123 'full' account? Meaning that if you keep anything over that in the account then it's effectively worth the £2/month extra.

I get a net £5 cashback a month from my 123 Lite, which only ever has a balance on the days SOs and DDs are due. I keep my cash in an easy access account, currently paying 2.35%, and make scheduled or one-off transfers from there to the 123 Lite as required.

A full fat 123 would reduce my net cashback to £3, and obviously has a lower interest rate than I get elsewhere. So I can’t see how I could break even with a full fat 123. 

Astria

Daliah said:

Astria said:

steffangl said:

Daliah said:

Don't forget it costs £4 a month.

This effectively reduces the interest rate to 1.26% on an account that is fully loaded with £20k all the time. That's a little over half of the currently best instant access rate. If you keep less in the account, the 123 interest rate is even worse.

Probably more fair to say it effectively costs £2 a month (as the Lite is £2 covering the cashback element).
That would then make it 1.38% with the full 20k in the account.
But yes, you're absolutely right - still less than other easy access savings accounts available.
You'd think they'd offer some other benefits of going for the full 123 over Lite.

doesn't £2000 break even on the 123 'full' account? Meaning that if you keep anything over that in the account then it's effectively worth the £2/month extra.

I get a net £5 cashback a month from my 123 Lite, which only ever has a balance on the days SOs and DDs are due. I keep my cash in an easy access account, currently paying 2.35%, and make scheduled or one-off transfers from there to the 123 Lite as required.

A full fat 123 would reduce my net cashback to £3, and obviously has a lower interest rate than I get elsewhere. So I can’t see how I could break even with a full fat 123. 

If you can do that it's great, but my DDs and SOs are various amounts on various dates, so it makes better use to have the cash available and top up the account once a month. I don't want to panic when I remember when a payment is coming out.

What easy access do you use, out of interest? There's a few I could use but they aren't particularly easy to access on my phone, requiring user id, password, memorable data to even get into the site and then the payment might not actually reach the target account until the following day. This is why I use easier to access accounts which may pay less interest but are easier to operate.

crumpet_man

If people are using the 123 as a hub/feeder account for SO/DD, why not use Chase savings at 1.5% instead?  Same interest rate but no fee.

I think people that still use the 123 account are doing so because it is easier for them and they are not motivated by the extra pounds which can be earned by rejigging their accounts.

Daliah

Astria said:

What easy access do you use, out of interest? There's a few I could use but they aren't particularly easy to access on my phone, requiring user id, password, memorable data to even get into the site and then the payment might not actually reach the target account until the following day. This is why I use easier to access accounts which may pay less interest but are easier to operate.

I use the Al Rayan one at present. Easy to use app, so even if I did forget to move funds, I can correct that as soon as Santander alert me about lack of funds. Hasn't happened yet, touch wood, as I have a detailed record of all payments due in AceMoney so payments shouldn't surprise me. I can also set up one-off scheduled payments from Al Rayan, which I usually do for the money that I need on the 1st of a month.

I agree there is a risk that payments might not arrive in time but this risk exists with any bank, and I haven't had an issue with AR in over 3 years (famous last words)

Astria

crumpet_man said:

If people are using the 123 as a hub/feeder account for SO/DD, why not use Chase savings at 1.5% instead?  Same interest rate but no fee.

I think people that still use the 123 account are doing so because it is easier for them and they are not motivated by the extra pounds which can be earned by rejigging their accounts.

I've never really "trusted" Chase with savings before, apart from the 5% cashback, always thought of them as non-UK.

None of my accounts have an overdraft facility and I like to have a small buffer on my current accounts so payments don't get declined. Since my DDs are typically always in excess of £1000, a £2000 buffer seems reasonable. This will pay the £2/month so I might as well use the rest for savings.

I'll look into Al Rayan though, so thanks to Daliah for that.

jimjames

Astria said:

phillw said:

I certainly wouldn't keep 20k in santander, if you're that forgetful then enough for 2/3 months tops.

Why ? because of the 1.5% rate? I know places like Yorkshire bank offer 2.5%, but I think I've got enough bank accounts and don't really want more for such a small amount of extra interest.

Virgin pay 2% on their linked saver now. I can't see the fuss about Santander when it's lower and costs too

Daliah

crumpet_man said:

If people are using the 123 as a hub/feeder account for SO/DD, why not use Chase savings at 1.5% instead?  Same interest rate but no fee.

Chase are really being left in the dust now when it comes to savings rates. They can't touch Barclays on up to £5K, and now Virgin have completely invalidated the Chase rates. I gather you can set up your current account to automatically pull in money from the linked saver, so it's even easier than with Chase. Virgin also have online access alongside their app, so there's a backup if there's a technical problem. Not that Virgin have had anything like the number of issues Chase had.