Santander customers vote with their feet following 123 account rate cut

The latest current account switching figures from bacs reveal that Santander lost more customers than it gained in the last quarter of 2016 following a cut to the credit interest rate on its popular 123 current account.

During the last three years Santander has frequently outperformed its rivals and has seen a net influx of more than 454,000 switchers (2014-2016) well ahead of Halifax in second with 371,400 and Nationwide Building Society third with 194,700. (See table for full details at the foot of this article)

However in the latest published figures showing the final quarter of 2016 Santander saw a net loss of customers for the first time in the last 3 years with a net outflow of 7,322 people moving their bank account elsewhere.

It’s highly likely this sudden change of direction in switching fortunes is down to its restructured 123 account tariff which was announced last August and came into play in November 2016.

These changes meant that customers with balances of £3,000 to £20,000, who were previously earning a generous 3% on their credit balances, saw their rate slashed to just 1.50%.

The quarterly switching summary below shows this is a marked change from the days when Santander was adding 65,000 net new customers per quarter in early 2015.

The bank had already increased the monthly fee on its flagship 123 current account from £2 to £5 in January 2016 but this in itself didn’t seem to impact the popularity of the account however the subsequent changes in November 2016 appear to have been the final straw for some.

Nationwide Building Society fared best in Q4 2016 putting on an impressive 30,510 net new switchers with Halifax second at 14,117 although the latter was 50% down on the quarter before probably down to the announcement that it was cutting the monthly reward payment from £5 to £3 on its Reward current account.

It’s good to see that customers are prepared to up sticks and move their custom elsewhere rather than stay put and simply accept savage cuts to their current account deal.

Whether this is just a one off knee jerk reaction it is too soon to tell but the next set of data due in October will confirm one way or the other.

There is too much apathy when it comes to switching banks – with so many different deals to choose from it makes good financial sense to seek out the best bank account.

Current Account Switching – 3 years 2014-17

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