On Tuesday 1st November, Santander will be cutting the interest rate on credit balances on its hugely popular 123 current account from 3% to 1.5%.
This will no doubt leave many of its four million plus customers scratching their heads as to what to do next – do they stick with it or is it simply no longer a viable option and so time to look for a new current account?
The decision will depend on a couple of factors – namely the size of their credit balance and also how much they receive each month via cashback for their utility bill direct debits plus of course they’ll also need to factor in the £5 monthly fee.
There are other current accounts paying credit interest or rewards, however three of the high profile alternatives – Halifax Reward, TSB Classic Plus and Lloyds Bank (Club Lloyds) have announced hefty cuts to interest/rewards from January and February next year, so people shouldn’t be too hasty to jump ship as some of the existing headline deals won’t be around for much longer.
However help is at hand – below you’ll find three comparison tables – I’ve crunched the numbers based on different combinations of size of credit balance and monthly cashback received – hopefully this will help you come to a decision re the future of your relationship with your Santander 123 current account. (Note the comparisons take into account the cuts from TSB, Halifax and Lloyds Bank).
The first table compares current accounts assuming you only receive credit interest on your Santander 123 account and no cashback.
The next table compares accounts assuming you receive credit interest on your Santander 123 account and £4 per month in cashback.
The final table compares accounts assuming you receive credit interest on your Santander 123 account and £9 per month in cashback.
It’s not easy now to get a decent return on your current account balance but hopefully the above info will help you make the most of your money in what has become a really testing environment.
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