A year ago Santander 123 halved its interest to 1.5% – now most should consider ditch
Comments
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The idea is to put the £20,000 per person into an easy access account at 1.30% which is £260 less the £12 Lite fee which comes to £248. Comparing like with like, the Santander 123 gives £298 interest less £60 which is £238. Hence the £10 extra as per my earlier post.ericcollinson wrote: »Yes.i agree,...but,with the Lite, you lose the 1.5% on the account balance.A couple with £20k in the. Lite,both drip feeding £200 into their 5% savers would not get the £261 the balance earns,just the £129 ish from the saver accounts.That £261 easily covers the extra £48 the 123 account would cost.0 -
You suggest downgrading to a 123 lite account and then put your £20k into a 1.3% easy access account and earn £248.
Why not leave the £20k in the 123 account and for a single person drip feed your £200 a month into a linked 5% saver,earning approx £64,and £280 from the 1.5% reducing balance,making a total of £344.Deduct the £60 charge if you have no cash back and you earn £284.
Or,if a joint account,drip feed £400 a month from the £20k into 5% savers earning approx £128,plus £260 from the 1.5% reducing balance,making a total of £388.Deduct £60 charge if no cash back and you earn £328.
As i pointed out earlier,the 5% savers are key,and should not be discounted,Martin did that in his analysis.0 -
With a Santander Lite you can still drip feed into the 5% regular saver. As it happens I am doing exactly as you suggest even though I am earning £10 less than I could. I have decided that it is not worth the hassle for this sum.ericcollinson wrote: »You suggest downgrading to a 123 lite account and then put your £20k into a 1.3% easy access account and earn £248.
Why not leave the £20k in the 123 account and for a single person drip feed your £200 a month into a linked 5% saver,earning approx £64,and £280 from the 1.5% reducing balance,making a total of £344.Deduct the £60 charge if you have no cash back and you earn £284.
Or,if a joint account,drip feed £400 a month from the £20k into 5% savers earning approx £128,plus £260 from the 1.5% reducing balance,making a total of £388.Deduct £60 charge if no cash back and you earn £328.
As i pointed out earlier,the 5% savers are key,and should not be discounted,Martin did that in his analysis.0 -
Should I ditch Santander 123?
For now the answer is yes for almost everybody, if the cashback is a winner transfer to lite.
If you've £20k saved in the account you earn £40 per year more in interest than you'd earn in a 1.3% savings account and pay £48 more in fees for the interest (123 lite offers all the cashback, regular saver, retailer offers, everything the full account does apart from interest)
On the face of it that would say everyone should go for lite or go elsewhere HOWEVER think about the interest you are losing with a positive balance in the lite account, you'd most likely need to keep a couple of grand at least in to cover DDs and day to day spending, if you have a balance of near enough exactly £20k the full account is just worth it imho.
If your balance isn't constantly between £19500 and £20500 I would move (under and the fee is just as high but less interest, over and the effective rate is eroded by earning 0.0% on the cash above this level)
If you pay tax on your savings I'd move it pronto!
Even a basic rate taxpayer would be left with a return under 1% after paying tax and the fee.
If rates rise in the next month or so on savings (probable) and Santander's rate doesn't move (also probable!) think again, 123 will have become an even poorer offering.If you don't like what I say slap me around with a large trout and PM me to tell me why.
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Last thing I should say, unless you've best part of £50k floating around, 123 isn't the best deal as you could do better by having a lite account/Natwest reward for cashback combined with the best free interest bearing current accounts. That's fiddlier though with DDs.If you don't like what I say slap me around with a large trout and PM me to tell me why.
If you do like it please hit the thanks button.0 -
After December 4th if 123 is still £5 for 1.5% interest these accounts will !!!!! slap it's !!! to Beijing, tax free for everyone and with flexibility (although without a crystal ball they may not be the best buys by then)
https://www.coventrybuildingsociety.co.uk/consumer/product/savings/cash_isa/30-day-notice-isa-4.html
https://www.coventrybuildingsociety.co.uk/consumer/product/savings/cash_isa/easy-access-isa-6.htmlIf you don't like what I say slap me around with a large trout and PM me to tell me why.
If you do like it please hit the thanks button.0 -
Why is every body,including Martin,completely ignoring the 5% saver in their analysis and calculations ?
The Santander 123 account,as you all must know,is an EASY ACCESS financial product divided into 3 parts.
1. pays 1.5% on any balance up to £20k,and 0% on anything above £20k.
2. gives access to a 5% linked savings account,maximum £200 per month,(£400 if a joint 123 account).
3. cash back at differing rates on qualifying direct debits.
So,the discussion,in the main is centred around an account with £20k on deposit,can we stick to this amount to start with.
I've suggested,in previous posts,that a single account holder transfers the max' £200 per month into the 5% saver,£2400 in the year,which would earn approx' £64.
The original £20k would obviously reduce each month until there is £17600 on deposit,this reducing balance,from £20k down to £17.6K at 1.5% would earn approx £280.
So, the initial £20k deposit,in total earns £280 + £64 = £344...over 1.7%.
A joint account paying £400 into the 5% saver earns = £389...about 1.95%
Now,for the above returns,i have assumed that only people with cash back to cover the £60 annual fee would choose this product,since cash back is one of the 3 key features listed above.
Anyone enjoying a cash back amount over £60 and the above percentages obviously increase.
HOWEVER,if you don't have cash back,(in which case you perhaps should not have chosen this product),the percentage gains would be as follows;
single account,.. £344 - £60 = £284 gain, about 1.42%.
joint account,.... £389 - £60 = £329 gain, about 1.65%
Even the worst examples above,paying the £60 annual charge beat your 1.3% saver.
CONCLUSION, not many should ditch.0 -
Single account
Santander regular saver earns £64
Easy access 1.3% starting at £20,000 and reducing by £200 per month to £17,600 earns £242
Santander Lite fee -£12
£64 + £242 - £12 = £294 which is £10 more than your £284
The joint Lite account with two regular saver earns a net figure of £344 which is £15 more than your £329.
Cashback on either 123 account is the same so does not affect the comparison.0 -
Well,..one thing at once,
1. You say;
The joint Lite account with two regular saver earns a net figure of £344 which is £15 more than your £329.
Show me your working out.
I make it 2 x 64 = £128.
hold on. i think i'm on it.0 -
RG2015,
Yes,i agree the additional savings you outline,regarding the Lite
Do you think they warrant the blog heading,...Most should ditch the 123.
"Most" implies a greater percentage should than should not,..but they would all have to be on little or no cash back.Surely "most" would have chosen this product mainly because of the cash back element.
I feel the blog heading should have been along the lines;
should the Santander 123 be ditched,........answer,....Perhaps,by a few.
regards
Sorry, i take your point about the cash back being a constant,and makes no difference.0
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