Santander to cut interest rate?

28 July 2016
Santander to cut interest rate?

Santander are launching a lite version of their popular 123 account. However, the main 123 account could see its interest rate cut, which is a bit of a kick in the teeth for customers.

The bank has been looking at cutting the interest rate on the 123 Current account from 3% to 2%, which could cost you a couple of hundred quid a year.

In January, Santander whacked up the 123 account's monthly fee from £2 a month to £5, and the new interest rate could come in around October.

At the moment, customers earn 1% on balances up to £1,000, 2% up to £3,000, and 3% if there's between £3,000 and £20,000 in the account.

Even if the 3% is dropped to 2%, that is still better than RBS Group's talk of offering negative interest rates.

It would force those running small companies and charity accounts to pay to keep money on deposit. While the Santander situation isn't great, they know they're still offering a better deal than many of their competitors.

Should the Bank of England cut the base rate to 0.25%, consumers will be hard pressed to find a better deal anywhere else.

Either way, this won't impress Santander customers who are likely to have joined the bank for their rates, and it is already being looked at by some analysts as a cynical ploy to give the bank a shot in the arm when it comes to making a profit.

It is though that somewhere in the region of 3.8 million people are using the account, with many impressed at how you could get cashback on household bills.

TOPICS:   Banking

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