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  • FIRST POST
    • ColdIron
    • By ColdIron 14th Jan 20, 9:20 AM
    • 5,579Posts
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    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 4
    • janbeno
    • By janbeno 15th Jan 20, 3:13 PM
    • 21 Posts
    • 6 Thanks
    janbeno
    It's 1.5% for me, regardless of how much I have in the account, as my cashback always reliably pays the account fee. Yes, I know I would get the same amount of cashback for £4/mth less but then I'd get 0% interest on some fairly large amounts and/or would have to manually refill several times a month, and still I'd be at permanent risk of going overdrawn, particularly when the monthly credit card bills hit. With the new overdraft charges, avoiding overdrafts becomes even more important to me. I'll continue to use the full-fat 123 when they drop the rate, albeit with a permanently reduced max balance.
    Originally posted by colsten
    After May 5th it is dropping to 1% it's 1.5% at the mo?
    • ColdIron
    • By ColdIron 15th Jan 20, 3:25 PM
    • 5,579 Posts
    • 7,646 Thanks
    ColdIron
    Quick point. Working out when to switch to Lite so I don't incur 2 charges. When's the best time to switch?
    Originally posted by janbeno
    This shouldn't happen. I downgraded 08/10/2018, my last £5 was taken 12/09/2018 and the next £1 was taken 09/11/2018 so apparently a free month. The interest is paid pro rata to the date you switch so no problems there either. I think the statement date will change to the date you switch (or the day after?) so you might want to bear that in mind
    • bristleposh
    • By bristleposh 15th Jan 20, 3:33 PM
    • 87 Posts
    • 72 Thanks
    bristleposh
    It doesn’t seem to be worth changing to lite for me, I have two 123 accounts, one has over £20k in the other is around the £20k mark I have the requisite two payments going out of each and have to make sure I have over £500 going into each each month (not a problem). Does anyone know if I can improve my interest without tying up my money in savings accounts.
    • 18cc
    • By 18cc 15th Jan 20, 3:41 PM
    • 2,075 Posts
    • 1,528 Thanks
    18cc
    As finger Bob said the interest is 1.2% and even less if you pay tax on the interest because of course you pay tax on the interest but you cannot claim tax back on the £5 you spend. This means the effective interest is a tad over 1.1% if you pay 20% tax
    • molerat
    • By molerat 15th Jan 20, 3:45 PM
    • 21,817 Posts
    • 16,029 Thanks
    molerat
    We currently have one joint and one each. Plan is to move cashback paying DDs into joint, downgrade joint to lite and keep enough in to service it, move rest to Marcus and top up my currently idling BOS accounts, change individuals to everyday accounts moving just enough to pay the remaining DDs while we move them out and close the accounts. No real point opening any more accounts with the current state of interest. So just under £60K will be moved out over the next couple of months plus loss of £14 monthly fees. Multiple that by a few thousand customers .........
    Last edited by molerat; 15-01-2020 at 4:00 PM.
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    • eskbanker
    • By eskbanker 15th Jan 20, 4:25 PM
    • 12,142 Posts
    • 15,050 Thanks
    eskbanker
    So just under £60K will be moved out over the next couple of months plus loss of £14 monthly fees. Multiple that by a few thousand customers .........
    Originally posted by molerat
    They'll obviously have factored in a higher level of customer attrition into their modelling so it's not as if this will come as a surprise to them!

    There's a precedent here in their late 2016 halving of the 123 interest from 3% to 1.5%, which temporarily increased the quarterly numbers of outbound CASS switches from 21/22K up to 26/28K over the next two quarters before reverting to 21/22K, so they'll hardly be distraught about losing 11,000 of their circa 7 million accounts (about 0.15%) if the same pattern is repeated. Obviously not everyone choosing to walk away would do so via a CASS switch but the point remains that there's a huge difference between noisy indignation on here and actual impact on a bank's performance....
    • schiff
    • By schiff 15th Jan 20, 4:37 PM
    • 18,798 Posts
    • 10,194 Thanks
    schiff
    As finger Bob said the interest is 1.2% and even less if you pay tax on the interest because of course you pay tax on the interest but you cannot claim tax back on the £5 you spend. This means the effective interest is a tad over 1.1% if you pay 20% tax
    Originally posted by 18cc
    There is a thought process enabling you to treat the Santander interest as being part of the exempt £1000, leaving the 5%s and 3%s to suffer the tax
    • Wikikenkey
    • By Wikikenkey 16th Jan 20, 8:58 AM
    • 248 Posts
    • 26 Thanks
    Wikikenkey
    It doesn’t seem to be worth changing to lite for me, I have two 123 accounts, one has over £20k in the other is around the £20k mark I have the requisite two payments going out of each and have to make sure I have over £500 going into each each month (not a problem). Does anyone know if I can improve my interest without tying up my money in savings accounts.
    Originally posted by bristleposh
    I am the same as you bristlepost - Two 123 accounts - circa 20k in each (not sure where to go) I also need easy access. I am considering Marcus (maybe two accounts). Still not too sure. What have you decided?
    • brewerdave
    • By brewerdave 16th Jan 20, 11:15 AM
    • 5,821 Posts
    • 2,627 Thanks
    brewerdave
    We currently have one joint and one each. Plan is to move cashback paying DDs into joint, downgrade joint to lite and keep enough in to service it, move rest to Marcus and top up my currently idling BOS accounts, change individuals to everyday accounts moving just enough to pay the remaining DDs while we move them out and close the accounts. No real point opening any more accounts with the current state of interest. So just under £60K will be moved out over the next couple of months plus loss of £14 monthly fees. Multiple that by a few thousand customers .........
    Originally posted by molerat
    Already moved/closed one of the sole accs. when the rate dropped from 3% - not sure exactly what I'm going to do with the remaining two accs. but one thing is for sure, they won't contain £20k after 1st May - I wonder which main stream bank (if any) is going to chase the £millions that will suddenly be looking for a new home??
    • castle96
    • By castle96 16th Jan 20, 11:18 AM
    • 2,021 Posts
    • 360 Thanks
    castle96
    "I am considering Marcus (maybe two accounts)."

    CAN you have 2 accounts in ONE name ??
    • roddydogs
    • By roddydogs 16th Jan 20, 11:36 AM
    • 6,520 Posts
    • 2,836 Thanks
    roddydogs
    Lets face it, there's not that much anyone can do, and apparently the BOE is thinking of reducing BR.
    • JimmyTheWig
    • By JimmyTheWig 16th Jan 20, 12:18 PM
    • 11,916 Posts
    • 11,436 Thanks
    JimmyTheWig
    I wonder which main stream bank (if any) is going to chase the £millions that will suddenly be looking for a new home??
    Originally posted by brewerdave
    I don't know that any of them will particularly want it.
    • roddydogs
    • By roddydogs 16th Jan 20, 12:22 PM
    • 6,520 Posts
    • 2,836 Thanks
    roddydogs
    Why would you want 2 marcus accounts when its not limited to 20k?
    • Fingerbobs
    • By Fingerbobs 16th Jan 20, 12:24 PM
    • 854 Posts
    • 369 Thanks
    Fingerbobs
    "I am considering Marcus (maybe two accounts)."

    CAN you have 2 accounts in ONE name ??
    Originally posted by castle96
    The terms and conditions say "Each Marcus account you open has a limit on how much you can pay in" which implies that you can have more than one, but I can't see it explicitly stated anywhere.
    • Wikikenkey
    • By Wikikenkey 16th Jan 20, 12:56 PM
    • 248 Posts
    • 26 Thanks
    Wikikenkey
    "I am considering Marcus (maybe two accounts)."

    CAN you have 2 accounts in ONE name ??
    Originally posted by castle96
    One in my name, one in partner's.
    • molerat
    • By molerat 16th Jan 20, 2:28 PM
    • 21,817 Posts
    • 16,029 Thanks
    molerat
    How on earth do you "upgrade" or change the account type ? Clicking on the upgrade or apply links takes you to a full blown application which eventually gives you the option to enter an account number then error message of you cannot switch from a Santander account, go to the account you wish to switch and click through from there. In the actual account page there is nowhere to click.
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    • Ed-1
    • By Ed-1 16th Jan 20, 3:14 PM
    • 2,748 Posts
    • 1,491 Thanks
    Ed-1
    How on earth do you "upgrade" or change the account type ? Clicking on the upgrade or apply links takes you to a full blown application which eventually gives you the option to enter an account number then error message of you cannot switch from a Santander account, go to the account you wish to switch and click through from there. In the actual account page there is nowhere to click.
    Originally posted by molerat
    You can transfer to a 123 Lite online but not an Everyday Saver. The latter needs to be done in branch:



    • molerat
    • By molerat 16th Jan 20, 3:37 PM
    • 21,817 Posts
    • 16,029 Thanks
    molerat
    You can transfer to a 123 Lite online but not an Everyday SaverCurrent. The latter needs to be done in branch:
    Originally posted by Ed-1
    Figured it out now thanks. I think I will change to a lite as a temporary measure and take the £1 hit then close once I have moved the non cashback paying DDs away. I will still be £1.50 better off as (roughly) £10K at 1.5% = £12.50 less £5 = £7.50 against £10K at 1.2 % = £10 less the £1 Santander hit = £9.
    Last edited by molerat; 16-01-2020 at 3:44 PM.
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    • enthusiasticsaver
    • By enthusiasticsaver 16th Jan 20, 4:57 PM
    • 9,751 Posts
    • 22,874 Thanks
    enthusiasticsaver
    I think this will cause many to move their money from Santander. We have the full Santander 123 and keep on average around £16k to £20k in it and the rest of our money in Marcus accounts. We have stuck with the full fee paying account so far as we get on average £9 per month cashback along with the 1.5% interest although obviously less once the monthly fee is taken into account. We will be moving to the Lite version and moving most of our money into Marcus. We will probably close the 123 credit card down too.
    Early retired in December 2017

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    • DavidT67
    • By DavidT67 16th Jan 20, 6:25 PM
    • 128 Posts
    • 59 Thanks
    DavidT67
    OK, so we have three Santander 123 'Full Fat' accounts with £20K each, which currently pay £900 interest per annum, no tax deducted as within our savings allowances and all over savings and investments are in tax wrappers.
    Cashback on all accounts equals or exceeds £5 pm monthly fee. Also have two 123 regular savers currently earning £72 pa. So £972 pa total?

    Post May, we would drop to £600 interest plus new regular savers earning £60, so £660 pa total.

    MSE offers HSBC Advance account as alternative with switching bonus £175 x2, no interest, no cashback, HSBC regular savers at 2.75% , so new total would be £ 350 bonus plus £100 interest.

    So at first glance it seems like sticking with 'Semi-Skimmed' 123 Select accounts is still better.
    Am I missing something?

    I guess if we reduced 123 balances to £5K each to cover monthly outgoings and moved £45K emergency fund to a savings account at 1.35% we would gain around £150 pa interest compared to leaving it all at Santander. A bit more effort for a marginal gain.
    Last edited by DavidT67; 16-01-2020 at 7:20 PM.
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