Same benefits. Lower fee. No interest.
Santander’s popular 123 Current Account has a new “Lite” version. One key benefit of the 123 accounts is cash-back benefits on household bills, including water, council tax, mobile, broadband and their own mortgage and insurance products. How do they compare?
This does not constitute advice and advice should be sought in all instances before acting on it.
Santander 123 Current Account
Last year, Santander raised it’s monthly fee on it’s 123 Current Account, from £2 per month to £5, resulting in significantly less new customers choosing to transfer.
In Q3 of 2015, over 50,000 new 123 Current Accounts were opened, compared to just over 3,500 in Q4 following the fee increase. That’s almost 93% fall in new business.
The account was historically popular due to it’s wide range of benefits:
- Credit interest – High rate of interest on savings balances
- Rewards – Cash-back on household bills
- The low monthly fee
The increase in the monthly fee meant that overall, savers with a balance of under £10,000 could be better off banking elsewhere.
“For example, £5,000 held in a Clubs Lloyds account which pays 4pc will earn £200 in a year – a higher return than £8,000 saved in the Santander account” Andrew Hagger, Moneycomms
Subsequently, the introduction of the new Lite account is thought to be aimed to entice customers back to Santander, who are interested in the Rewards side of the account, rather than the credit interest.
Santander 123 Lite Account
The 123 Lite offers zero credit interest, however the monthly fee is just £1.
The Rewards:
- Cash-back on spending
- 1pc on water and council tax bill
- 2pc on gas and electricity bills
- 3pc on mobile, broadband and home phone bills
- Cash-back on Santander mortgage payments
- Cash-back on Santander home insurance payments
- Cash-back on retailers at 15pc
Customers must:
- Credit the account with £500 per month
- Have a minimum of two active direct debits
- Engage with their online banking at least once every quarter
Do your research
If you are considering switching banks in the near future, and like the idea of this account, do your research first.
Both Santander accounts offer good Rewards and depending on the level of savings you have, would depend if the Current or Lite version of the account would suit you best.
However, other similar products are available too. RBS / Natwest have Rewards accounts, offering 3pc on household bills that are paid by direct debit.
TSB also have a Classic Plus account, offering 5pc credit interest on small savings balances up to £2,000, as well as other cash-back benefits.
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