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  • FIRST POST
    • ColdIron
    • By ColdIron 14th Jan 20, 9:20 AM
    • 5,580Posts
    • 7,648Thanks
    ColdIron
    Santander to slash 123 account interest and shake up overdrafts
    • #1
    • 14th Jan 20, 9:20 AM
    Santander to slash 123 account interest and shake up overdrafts 14th Jan 20 at 9:20 AM
    Even less reason to keep the full fat 123 now
    • At the moment, the 123 account pays 1.5% AER on balances up to 20,000, as well as up to 3% cashback on selected household bills, for a 5 fee.
    • But the bank's now revealed that from 5 May 2020, it will be cutting its savings rate to 1% AER and capping its cashback at 5 per month in each of its cashback categories, for new and existing customers. The 5 monthly fee will remain the same.
    https://www.moneysavingexpert.com/news/2020/01/santander-to-slash-savings-rates-and-shake-up-overdrafts---what-/
Page 2
    • xylophone
    • By xylophone 14th Jan 20, 2:30 PM
    • 32,067 Posts
    • 19,925 Thanks
    xylophone
    Pretty much me too!
    Ditto - all those Virgin savers (and other savers).....and I really don't want to mess about with all those household DDs...
    • colsten
    • By colsten 14th Jan 20, 2:33 PM
    • 11,713 Posts
    • 11,058 Thanks
    colsten
    I'm Lite, I'm staying where I am.

    The closest "clean" I suppose would be Nationwide after you've used the 5% Flexsaver option as that pays 1% as well but no cashback on it or monthly fees. But you can get the regular saver with it too so...
    Originally posted by Neil Jones
    How would Nationwide be even close? The FlexDirect pays 1% interest on up the 2,500, and no cashback. The 5% RS is dead but RS is irrelevant to the current account decision.
    • ColdIron
    • By ColdIron 14th Jan 20, 2:48 PM
    • 5,580 Posts
    • 7,648 Thanks
    ColdIron
    The nice thing about the full fat 123 was the high balance meant you didn't have to worry about DDs (utility and CC), regular saver SOs and monthly pay in SOs. But when they dropped to 1.5% I couldn't justify the cost after a while so downgraded to Lite and moved my cash to Marcus. Same cashback, same rate and saved 48. As belt and braces I set up an arranged overdraft on the Lite account but don't envisage having to use it

    To solve the DD/SO issues I moved 5k to Club Lloyds. I only have 3 regular savers I can be bothered with now, so 900 of SOs for them and a few hundred SO to Lite all on the first of the month. My CC DDs go out on the 7th/8th and it would be unusual for me to exceed 5k. I only have 1,500 pre-req monthly pay in accounts (2 * TSB and the Santander Lite) which handily satisfies Lloyds as well. These cross fire on the 21st so there is no bunching

    Now that Club Lloyds is an effective 1.2% on a full balance (coincidentally the same as the pre-drop 123 after the 5 fee) I'm getting 1.2% on 5k and 1.5% on 15k (for now). A lot better than the effective 0.7% on the new 123. I've been running this for nearly 2 years and it's nicely bedded in

    If you don't have very large regular saver outgoings and things are nicely spread out it might be worth looking at a Lite, Club Lloyds and Marcus (or similar) combination. Just an idea
    • Neil Jones
    • By Neil Jones 14th Jan 20, 2:49 PM
    • 3,299 Posts
    • 2,416 Thanks
    Neil Jones
    How would Nationwide be even close? The FlexDirect pays 1% interest on up the 2,500, and no cashback. The 5% RS is dead but RS is irrelevant to the current account decision.
    Originally posted by colsten
    Closest "clean" interest rate. 1%. No fee, but no cashback.

    There is no other account on the market that I am aware of that does the Santander cashback model, the only other one was the Natwest Rewards, which they are changing from next month anyway, so this makes the Santander account unique once again.
    • schiff
    • By schiff 14th Jan 20, 2:51 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    The fact that so many of us propose to stick with the account is revealing. It shows that a good interest rate, plus a maximum 20K balance (to earn the interest) and a cash-back scheme that was easy to make a modest profit from was very attractive. They will surely lose a number of accounts and retain the others but with a much lower maintained balance.

    I hope they have seen the sense in that.
    • schiff
    • By schiff 14th Jan 20, 2:55 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    Has MSE - in the person of ColdIron - coined a new epithet in 'full fat 123'?
    Last edited by schiff; 14-01-2020 at 2:58 PM.
    • schiff
    • By schiff 14th Jan 20, 3:01 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    There is something else - is their RS geared only to Select customers, not Lite customers?
    • fun4everyone
    • By fun4everyone 14th Jan 20, 3:13 PM
    • 1,974 Posts
    • 3,186 Thanks
    fun4everyone
    There is something else - is their RS geared only to Select customers, not Lite customers?
    Originally posted by schiff
    I'm a lite customer and have the 123 regular saver.

    Not really surprised at this turn of events. I use Marcus/Regular Savers for my cash and 123 lite for bills. I only keep enough in the 123 lite to cover the outgoings each month and apart from TSB my balance in current accounts is neglible. I do have to move money manually out of Marcus once a month to cover the monthly round of firings into the Reg Savers/Pay in Requirements/Fund 123 lite to pay the bills but the set up works for me.

    Going forward not much will change in my personal set up although I hope for a current account with better cashback on bills to appear the chances of that actually happening seem slim.

    I also am reducing the amount of chasing Regular Savers I am doing and note that others ITT are doing the same. I did have 14+ a year ago. What else can we do with our money now but invest it? You either lose to inflation or take a risk in the current climate. I keep my emergency fund to an absolute bare minimum these days.
    • fwor
    • By fwor 14th Jan 20, 3:18 PM
    • 6,275 Posts
    • 4,323 Thanks
    fwor
    retain the others but with a much lower maintained balance.
    Originally posted by schiff
    But that won't worry them, will it? Isn't the 1.5% pretty much a loss leader to Santander?

    It's annoying for me because it means I will have to find somewhere else to put 20k, and it means that the Lite account will then make more sense than "full-fat" - so I'll be another making the change to Lite in May.

    Like fun4everyone, I've given up on the various Regular Savers - too much faff IMO for too little gain.
    • ColdIron
    • By ColdIron 14th Jan 20, 3:20 PM
    • 5,580 Posts
    • 7,648 Thanks
    ColdIron
    There is something else - is their RS geared only to Select customers, not Lite customers?
    Originally posted by schiff
    The RS is available to 1|2|3 World account holders
    https://www.santander.co.uk/personal/savings-and-investments/savings/regular-esaver

    The 1|2|3 Lite Current Account is part of 1|2|3 World
    https://www.santander.co.uk/personal/123-world
    • schiff
    • By schiff 14th Jan 20, 3:22 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    I'm a lite customer and have the 123 regular saver. TY

    I also am reducing the amount of chasing Regular Savers I am doing and note that others ITT are doing the same. I did have 14+ a year ago. What else can we do with our money now but invest it? You either lose to inflation or take a risk in the current climate. I keep my emergency fund to an absolute bare minimum these days.
    Originally posted by fun4everyone
    I'm starting to look at 2% RSs now in view of this. The normal commitment to RSs usually means being tied in to X per month for usually 12 months or more and that has tended to put me off going for the lesser rate. But I've done a run through of the 2% that I haven't got and I find they have a lot in their favour - a fixed rate (some of them), being able to open and service online, no obligation to subscribe every month and the unlimited facility to make withdrawals!

    That makes them very interesting following today's news!
    • fun4everyone
    • By fun4everyone 14th Jan 20, 3:25 PM
    • 1,974 Posts
    • 3,186 Thanks
    fun4everyone
    I'm starting to look at 2% RSs now in view of this.
    Originally posted by schiff
    Yes....agreed. I have some myself, and it does mean cash in them is keeping pace with inflation. However I am most definitely not chasing them like I did with Virgin Branch 3%s for example.

    When I had loads of 5%/4%/3% regular savers I held quite a bit more "emergency fund" cash than I do now.
    Last edited by fun4everyone; 14-01-2020 at 3:27 PM. Reason: Still got Nationwide 5% Reg Saver until April :)
    • schiff
    • By schiff 14th Jan 20, 3:28 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    But that won't worry them, will it? Isn't the 1.5% pretty much a loss leader to Santander?
    Originally posted by fwor
    It may. Will the saving they make on the interest rate reduction equal the loss that will probably happen in the reduction of deposited funds?
    • fun4everyone
    • By fun4everyone 14th Jan 20, 3:29 PM
    • 1,974 Posts
    • 3,186 Thanks
    fun4everyone
    Modern retail banking (from what I have read) does not have even a moderate reliance on customers depositing funds. Apologies but I cannot cite specific regulations or lack of regulations because I am just going off memory.
    • Cmdr_Bond
    • By Cmdr_Bond 14th Jan 20, 4:04 PM
    • 579 Posts
    • 767 Thanks
    Cmdr_Bond
    Even less reason to keep the full fat 123 now
    • At the moment, the 123 account pays 1.5% AER on balances up to 20,000, as well as up to 3% cashback on selected household bills, for a 5 fee.
    • But the bank's now revealed that from 5 May 2020, it will be cutting its savings rate to 1% AER and capping its cashback at 5 per month in each of its cashback categories, for new and existing customers. The 5 monthly fee will remain the same.
    https://www.moneysavingexpert.com/news/2020/01/santander-to-slash-savings-rates-and-shake-up-overdrafts---what-/
    Originally posted by ColdIron
    They're also changing their overdraft and some other fees...

    I know, I've just upgraded! Might change to Lite in May

    Before 6th April 2020

    Arranged overdraft

    < 2,000.00 = 1.00/day fee
    2,000.00 - 2,999.99 = 2.00/day fee
    3,000+ = 3.00/day fee

    From 6th April 2020

    39.9% APR/AER (variable)

    Additionally, from 5th May 2020, both the foreign currency conversion fee for cash withdrawals in a foreign currency, and the foreign currency purchase few for a debit card payment in a foreign currency rise from 2.75% to 2.95% of the total transaction value.
    Not as green as I am cabbage looking
    • schiff
    • By schiff 14th Jan 20, 4:44 PM
    • 18,801 Posts
    • 10,198 Thanks
    schiff
    Whenever I see these horrendous overdraft interest rates, I can't help but feel heartfelt sympathy for those trapped in such a situation.

    It certainly puts my fretting over a half per cent rate cut into perspective.
    • Cmdr_Bond
    • By Cmdr_Bond 14th Jan 20, 5:15 PM
    • 579 Posts
    • 767 Thanks
    Cmdr_Bond
    And it's more than the fees would've been on the max....

    3/day for 365 days = 1,095
    3,000 39.9% = 1,197 and more if its higher
    Not as green as I am cabbage looking
    • harz99
    • By harz99 14th Jan 20, 6:01 PM
    • 3,012 Posts
    • 3,050 Thanks
    harz99
    Back to Lite for us in May, balance over 2k to Marcus. Like others here I can't be bothered chasing regular savers now, and as we have exhausted all the switch bonuses we don't need loads of DDs or SOs so life is becoming easier.
    • where are we
    • By where are we 14th Jan 20, 6:32 PM
    • 279 Posts
    • 86 Thanks
    where are we
    Bob will be singing "A Hard Rain`s A-Gonna Fall" tonight as I cook the dinner! We have been with Santander since the Girobank days. 123 is our main hub current account and we have too many standing orders going out to regular savers at the beginning of the month as well as many direct debits, to warrant a change. Keeping more money in Marcus would mitigate the interest rate loss but Marcus does not do standing orders, so we would need to manually transfer a large sum at the end of each month to 123 to cover the money leaving for the regular savers.We would be uneasy this.
    • YBR
    • By YBR 14th Jan 20, 7:03 PM
    • 115 Posts
    • 105 Thanks
    YBR
    Like many others, our full-fat 123 is still a relatively good deal.
    I'm not interested in chasing switching bonus, just a good-enough long term rate.

    With the current account (still likely to yield 20pm in cash-back and interest) we have 2x regular savers at 3%, plus mini123 for each kid in 3% territory.
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