Santander is to cut the interest rate on its popular 123 current account from 1% to 0.6% from 3 August. The rate had been 1.5% until last week. In three months customers holding the full balance (£20,000) “will have gone from earning up to £302 a year in interest to £120, but the bank will continue to charge... £5 a month”, says George Nixon for ThisisMoney.
What’s more, this month Nationwide cut the rate on its FlexDirect account from 5% to 2% on balances up to £1,500. The 2% rate is still the highest on a current account. But you only get it if you pay in £1,000 a month and it drops to 0.25% after a year.
The upshot? Stop trying to save and spend from the same account, says Adam Williams in The Daily Telegraph. “The top easy-access savings accounts from Investec, Marcus and RCI Bank pay 1.2%... with no monthly fee.”
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If you want cashback on your bills, Santander’s 123 Lite account offers the same cashback rates as its standard one but with a lower £1 fee and no interest. You can earn up to 3% cashback, capped at £15 a month. “Taking that fee into account the most an account holder can earn is £168 a year,” says Katherine Denham in The Times.
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