7th January 2016
Santander’s 123 current account customers are set for an “unwelcome” New Year’s gift when the bank hikes the its fees by 150% from next Monday, 11 January.
Account users will have to consider how they use the account to ensure they are still getting a good deal and not paying more for the account than they get out of it.
Susan Hannums, director at independent savings advisers Savingschampion.co.uk, said: “While this is not a surprise – it was first announced back in September – it is worth reminding people that this is happening, especially as the fee is going up by 150%.
“That means across the year instead of paying £24 for the benefits of the current account, you will be paying £60, so you may need to fully utilise the cashback facility in order to mitigate the fee.”
The account pays customers 1% cashback on water bills, council tax and Santander mortgage payments, 2% on gas and electricity bills, and 3% on mobile and home phone bills, broadband and paid for TV packages.
In addition, customers receive 1% AER on balances over £1,000, 2% AER on balances over £2,000 and 3% AER on balances between £3,000 and £20,000.
Hannums added that it is still worth remembering the account pays a healthy 3% AER interest on balances between £3,000 and £20,000, so for savers it’s still worthwhile. But as always, you need to make sure that you will be gaining more from the account than you will pay for it.
She said: “If you have a balance of, say, £5,000 then you would receive £150 a year in interest before tax. If you took away the £60 fee you will pay for the account, you will still be left with £90 in interest, which is equivalent to 1.80% AER in interest for a year.
“Given that the very best rate available on an easy-access savings account is 1.65% AER with RCI’s Freedom Savings Account, this gives you an idea of why the Santander account should not be ignored for savers looking to improve their interest rates.”
Tashema Jackson, money expert at uSwitch.com, added: “The 150% fee hike is an unwelcome New Year’s gift for Santander’s 123 current account customers. Many will feel cheated by the bank moving the goalposts and could find that the fee increase significantly reduces the account’s benefits.
“If you’re a Santander 123 customer, check to see whether the account still offers you enough cashback or interest to justify the higher monthly charge, or whether you could be better off switching.”
Other High Interest current accounts that might be worth considering, according to Hannums, include:
TSB Classic Plus Account
Nationwide FlexDirect Current Account