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Santander unleashes another cut of 123 accounts on the SAME DAY that bites into a previous one, costing customers hundreds of pounds in lost interest
- Santander today cut the interest rate on 123 accounts from 1.5% to 1%
- It has delivered savers more bad news with a 0.6% cut in August
- Savers with £ 20,000 in the account will go from earning £ 302 to £ 120
- Santander hinted at further savings cuts in its results last week
Santander 123 customers today face a double whammy of bad news: They will receive 0.6 percent interest on their balances starting in August 2020 with the banking giant revealing the move the same day a change occurs. previous.
Within three months, it means that customers with the full balance will have gone from earning up to £ 302 a year in interest to £ 120, but the bank will continue to charge cardholders £ 5 a month for the privilege.
This means that those who maximize the account will receive £ 60 a year in interest once it is taken into account.
On your bike? The interest rate on Santander’s 123 account will drop from 1.5% to 0.6% in three months. Savers can find much better value elsewhere, even if they still pay the refund
Santander account 123 paid 3 percent interest on balances of up to £ 20,000 through 2016, giving item ‘three’ to the product name.
This dropped to 1.5 percent, and then to 1 percent today.
On August 3 this will be further reduced to 0.6 percent, although the £ 15 per month limit on bill reimbursement, the other feature of the account, will not be affected.
It means that between May 3 and August 3, the interest rate paid on the balances will decrease by three fifths in three months.
The announcement comes a week after the British arm of the Spanish bank reported a 58 percent drop in pre-tax earnings to £ 114 million in the first three months of this year, largely due to the bank booking £ 122 million to cover possible bad loans related to the coronavirus crisis.
The bank also announced that 206,000 mortgage clients, a fifth of its loan portfolio, were on pay holidays, along with 33,600 unsecured borrowers, which means it has less money in the coming months.
Santander blamed the change on the Bank of England for reducing its base rate to a record low of 0.1 percent.
In his results, he said he expected his earnings to be further affected by the low base rate, but that his goal would be to compensate for this with “changes in deposit prices that will take effect” in the second half of 2020.
Initially, it appeared that this was due to cuts in May to account 123 and various other savings accounts that would have a greater impact in the second half of the year.
This is Money asked the bank last Tuesday if that meant more cuts could come.
We were told that Santander would continue to review its rates against current market conditions.
Current account interest under threat
This month marks a pretty miserable month for savers who depend on checking accounts to pay them a decent interest rate.
Last Friday, the Nationwide Building Society canceled Britain’s latest 5 percent savings deal when it reduced the interest paid on its FlexDirect account to 2 percent, the first time in at least eight years that no savings account has paid the 5 percent interest.
Meanwhile, TSB cut its Classic Plus account for the second time in 10 months on May 2, from 3% to 1.5%.
While the TSB rate still beats any easily accessible savings account, although it only pays that rate on balances up to £ 1,500, the 0.6 percent rate paid on 123 August balances can be exceeded by 16 accounts at This is The best money buying tables.
While the generosity of Santander’s 123 account helped it enroll millions of customers and checking account switches since its launch in 2012, since late 2016 it has bled customers through the exchange service, according to official figures.
In the last three months of 2019, it lost 9,894 net customers, according to the latest exchange figures.
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