You might have seen a great deal about the Santander 123 account in the news as of late. Well, it’s important information if you’ve got one of the accounts yourself. Things are changing and in the current global situation, financial information can so often seem at the bottom of the list. It’s worth finding out how it affects you though.
What’s The Santander 123 Account?
The account itself was a game changer at one point. You paid a small fee to have the account but got a decent interest rate on the money in your account up. 3% on everything up to £20k. That was fairly unbeatable for a current account.
What Changed?
Things changed after a while, including a price hike for the fee and then they announced the interest would drop to 1% last week and the cashback offered on utility bills and mortgages would be capped. At one point there was no cap and you got 1% cashback for your Santander mortgage payment and either 2% or 3% on other bills including water and your TV package. With this drop to 1% interest and the capped cashback, you would still perhaps make a little bit of money for having the account, but the increased £5 fee certainly would take a lot of this. On the day the drop to 1% interest happened, they announced there will be another drop to 0.6%. A double drop as it were.
What’s The Downgrade?
There is a ‘lite’ version of the Santander 123 account which costs £1 a month and only gives you the cashback, no interest. If you’re making the full capped amount of £15 in cashback, it’s probably worth it. As we have our mortgage with Santander, I’ll be dropping, or downgrading my account to the lite version.
Where Am I Putting My Money?
When this announcement came into play I knew I needed to get my money shifted out of that account. The majority of my money should I say, as I intend to keep the account in it’s ‘lite’ version. Where would I put the rest of my money though? It seems daft to move it somewhere with a similar interest rate. Well, the best interest rate on the market at the moment, in terms of easy access is with Marcus. It offers 1.2%. I’ve written bout the top easy access savings accounts previously and you can read that post here. That’s double what I’d be getting when Santander drops it’s rate for that second drop. I’ll also save £4 a month on the Santander 123 account charge so all in all it works out much better. The new interest rate my money would be making in the new account is variable. It could change.
How Much Am I Putting In That Account?
I’m hopeful that it will stick at 1.2% for a good while and I can make the most of my savings. Being self employed I’m not sure just how much I want to put away but I know that it’s easy access so should I need it I can get my hands on it. So I need to figure out the actual amount to put away. If it’s £5k, I’d make £60, but also save that £4 a month, adding an extra £48. Compare that to 0.6% of £5k whilst paying £5 a month. That works out at £30, but £60 a year for the account. Meaning I’d be making -£30.
Check Your Rates
Make sure you take time to check the rates that your money is making. I know it’s difficult and some of us find it confusing. But if you don’t put your money in the right place, it doesn’t work for you and you’ll be missing out on cash. Take care and look after one another.
