Save, make, understand money


Santander current account shake-up: Act now

Paloma Kubiak
Written By:
Paloma Kubiak

From tomorrow, Santander will double the monthly fee on the 123 Lite current account while the cashback categories will also be tweaked. Here’s what you need to know and alternatives to consider.

In July, Santander announced more changes to its 123 current accounts to take effect on 27 October – the third tweak this year affecting millions of customers.

Here’s what’s changing from tomorrow:

  • 123 Lite current account fee to double from £1 to £2 a month (there’s no change to the 123 current account so it will continue to cost £5 a month)
  • The cashback categories on the 123, 123 Lite, private and select current accounts will change. Water bills currently attract 1% but this will increase to 3%.
  • Meanwhile, communication cashback on phones, broadband and TV currently attract 3%. This will change to 1% tomorrow.
  • There’s also a maximum £5 cashback rate for each the three categories, meaning a maximum of £15 can be earned each month.

123, private and select customers can earn 0.60% on in-credit balances of up to £20,000 (£119.60 per year maximum) and up to £180 a year in cashback on bills. This means they can earn up to £299.60 per year, though will need to pay £60 a year in fees.

For 123 Lite customers, they can earn up to £180 cashback on everyday bills each year, with an annual fee of £24 from tomorrow.

Where now for current account rewards?

Rachel Springall, finance expert at Moneyfacts, said: “As with any current account it is vital for consumers to check the benefits they may have and ensure they are taking full advantage of what is on offer, especially if the account has a monthly fee.

“The changes from Santander will mean customers will earn less cashback on items like communication bills, so the overall package should be checked to see if it’s worth keeping for the monthly fee, which is rising.

“There are alternative reward current accounts available on the market, but the best for a consumer does depend on their spending and savings habit. Therefore, it’s wise to check all the T&Cs and work out some scenarios before moving to a new account.

“It’s quick and simple to switch accounts using the Current Account Switcher Service, so it’s no hassle to move accounts these days. If you’re unhappy with a package or service, then it might be time to move.”

Below are the alternative reward accounts you may want to consider:

  • NatWest: Customers can earn £4 when they pay two or more direct debits from the reward account (two of those need to be at least £2 each). Plus customers can earn £1 back in rewards when logging into the mobile banking app. Spends at selected partner retailers can also earn at least 1% back. However, it comes with a £2 a month fee. It’s currently running a £125 switch deal which means in the first year of a switch customers can earn £161 after the £2 a month fee. Switchers will also be able to open the NatWest Digital Regular Saver paying 3% gross on up to £3,000 a year.
  • Barclays Bank: Barclays current account customers can earn up to £7 each month (£3.50 for the first two direct debits) as long as they pay a £4 a month membership fee and pay in at least £800 each month. This means customers can earn up to £36 a year. If customers have more products with Barclays such as a mortgage, home insurance, loan or life insurance, they can earn more cashback.
  • The Co Operative Bank: Customers can earn up to £5 a month with its Everyday Rewards account as long as they pay in a minimum £800 each month, stay in credit, or within your agreed arranged overdraft limit, log in to online or app banking at least once a month, opt in for paperless statements and pay out at least four direct debits. The rewards can be paid into your nominated account or customers can opt to donate the cash to charity.
  • Halifax: Earlier this year, Halifax unveiled its new reward current account. It introduced a £3 monthly fee for those who couldn’t pay in £1,500 a month. Only those paying in £1,500 a month are eligible for additional perks such as £5 a month, cinema tickets and magazine subscriptions. Customers also have to select a ‘qualifying option’. This is a choice between spending £500 on your card or holding a balance of £5,000 each month. Plus, you’ll also need to remain in credit.