New Santander 123 Current Account - 3% Interest and 3% Cashback

New Santander 123 Current Account - 3% Interest and 3% Cashback
Date of Publication: Saturday, 03 March 2012 00:00
Last Updated: Wednesday, 19 February 2014 11:04

The new Santander 123 Current Account launches on Monday 5th March, offering a rare and preferential combination of cashback and interest.

 

The Santander 123 Current Account: Cashback!

Among the benefits of the Santander 123 current account is the offer of cashback on the majority of all household domestic bills paid by direct debit:

 

  • 1% cashback on water bills, council tax payments, and Santander mortgage payments;
  • 2% cashback on utility bills: electricity and gas;
  • 3% cashback on telecoms and multimedia: phone, mobile, broadband and paid TV packages.

 

How much is this worth?

Customers who opt for the Santander 123 current account can make substantial savings. With iPhone 5 contracts and broadband / digital TV packages both starting at around £30, the 3% cashback presents a welcome saving of at least £21 annually – and much more for those who pay extra for higher-spec packages.

 

There are also obvious benefits for those responsible for household bills. Years of above-inflation increases in utility bills have pushed the average standard tariff gas and electric bill to around £1,315 [electricityprices.org.uk]. At these prices, Santander account holders would expect to save another £26.30 annually in cashback.

 

The small cashback measure on council tax payments is no small sum either. With the average band D home set to rise to £1,456, current account customers could expect to save £14.56 per year on this.

 

The biggest gains are available for those who have a mortgage with the bank. With 1% cashback on Santander mortgage payments, account holders paying £750 per month on their home loans would receive an extra £90 per year back into their accounts.

 

Based on these conservative examples, the average 123 current account customer could save £65 or more on household bills, while homeowners with the bank could easily double this amount.

 

Some Cashback Estimates

Cashback Offer
Measure Cost
Cashback
1% Water Average Household Bill £388 pa £3.88
1% Council Tax Average Band D £1,456 pa £14.56
2% Utilities Average Energy Bill £1,315 pa £26.30
3% Telecoms iPhone 5 Contract c. £384 pa £11.52
3% Telecoms Broadband / Digital c. £360 pa £10.80

 

(The Santander 123 cashback credit card complements the benefits offered by the 123 Current Account by offering 1% cashback on all supermarket spending, 2% at department stores, and 3% on train fares and at petrol stations. This will prove particularly useful as petrol prices and above-inflation train fare rises continue to squeeze hard-pressed consumers.)

 

The Santander 123 Current Account: Interest!

At the right balance, the Santander 123 current account also acts as a decent savings account.

 

  • 1% AER on entire balance when balance reaches £1,000.
  • 2% AER on entire balance when balance reaches £2,000.
  • 3% AER on entire balance when balance reaches £3,000 [up to £20,000]

 

It will hardly have escaped notice that instant access savings accounts have offered desperately poor returns in recent years. At the start of 2014, it had become necessary to lock funds away for at least two years before the returns would match inflation. Most current accounts - with the notable exception of Nationwide - pay nothing at all in interest.

 

The Santander account requires a minimum deposit of £500 per month to apply for cashback and £1,000 to receive interest. It also has a £2 per month operating fee. In return, alongside the generous cashback savings, the account offers rates of interest that outperform the best instant access savings accounts on the market.

 

An average balance of £5,000 across the year will return gross interest of £150. There are few instant access products of any description that will better this.

 

Santander’s 123 Current Account

Following the launch of an up-front interest bond in 2011, which it described as ‘revolutionary’, Santander’s new 123 current account represents another lateral and market-challenging move.

 

Just as current accounts had started to become classified almost entirely by the calibre of their overdraft facilities, Santander has returned the focus back to credit interest in eye-opening fashion, with the unusual (and considerable) feature of cashback thrown in for good measure.

 

Customers able to stay in credit will benefit enormously from Santander's innovative and prolific new offering - a move which may yet force a rethink in the market for current accounts.

 

Last updated: 20 January 2014.

 

Keith McDonald

Which4U Editor

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Saturday, 03 March 2012 00:00
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Top 5 Current Accounts

Provider
AER
Min Bal
O/D Rate
O/D Buffer
Apply
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5.00%
£1,000
0%
£2,000
0%
£1
No Offer
£100
5.00%
£1
No Offer
£25
0%
£1
No Offer
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0%
£1
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Nationwide Flex-Direct Account

Nationwide
  • Get 5.00% AER (4.89% gross p.a.) for in-credit balances up to £2,500 (fixed for the first 12 months)
  • You if you pay in at least £1,000 per month
  • Fee-free overdraft for 12 months (subject to approval)
  • Access to special rates and exclusive products
  • Online and mobile banking
  • Telephone banking and free text alerts
  • No monthly fee
  • UK call centres

Natwest Select

NatWest
  • ** Voted the best card benefits programme of the year at the Card and Payment Awards. **
  • Free day-to-day banking without subscription charges
  • Earn a minimum of 1% of your spend on all contactless payments with Cashback Plus
  • Overdraft available subject to eligibility, giving your finances some breathing space
  • Chequebook available subject to eligibility; handy when cash or cards aren't convenient
  • Monthly statements with all your transactions and your balance - by post or online. Or pick up a mini-statement from our cash machines

TSB Classic Plus Account

TSB
  • Market leading 5% AER variable interest on balances from £0 - £2,000.
  • To earn 5% AER you must credit your account with £500 each month, register for internet banking, paperless statements and correspondence (if available).
  • No introductory offer period.
  • Available to existing and new customers.
  • Low minimum monthly deposit of £500 required to meet eligibility.
  • No monthly fee.
  • Access to all the features of the standard Classic account such as Money Planner, Control, SMS alerts and internet banking.
  • Transact in branch, online or over the telephone.
  • £25 interest and fee free overdraft subject to application and approval
  • No hidden clauses – only need to meet CTO, register for internet banking, paperless statements and correspondence (when available) to get the interest rate.
  • 7 day switching service available.

Nationwide FlexAccount

Nationwide
  • VISA debit card with every account
  • The age restriction to open the account is 18
  • Free travel insurance: multi-trip European cover worth up to £70* (conditions apply)
  • Manage your account online with an excellent internet banking service.
  • Three-month interest-free overdraft when you switch to FlexAccount
  • Free day to day banking
  • Voted Best Overall Online Provider 2009 by Your Money

RBS Select

RBS
  • Free everyday banking - no monthly subscription charges.
  • No arrangement or renewal fees - on overdrafts up to £15,000. And pay no interest on agreed overdrafts of up to £100.
  • Save on your mortgage - use your Interest Paying Current Account balance to save money with our Offset Service.
  • Easy access to your money - your debit card gives you access to almost every cash machine in the UK. You can also pay for goods and services wherever you see the logo shown on your card.
  • Online banking - manage your money 24 hours a day, 365 days a year with our telephone and internet banking services. (Except for short periods of essential maintenance.)
  • Overseas money - get money in local currency at cash machines and buy goods wherever you see the logo shown on your card.
  • Statements - monthly statements list all transactions and your current balance. You can also get mini-statements from any cash machine.

Barclays Bank Account

Barclays
  • Create your own personalised Current Account with the new Barclays Features Store - Customise your account with a range of Packs that cover gadgets, home appliances, travel and more. Simply add the Features that you want and leave out the ones that you don't. Terms, conditions and exclusions apply - read the policy documents so you know whats covered and whats not.
  • Free Text Alerts to help manage your money
  • Personalise your debit card for free with your favourite photo (image guidelines apply)
  • Contactless debit card (subject to status) allows you to make fast and secure payments for items that are priced £20 or less.
  • Online, Telephone, Mobile and Branch
  • No minimum funding required
  • Barclays Pingit - the quick and easy way to send or receive money with just your mobile
  • Free switching service available

Santander 123 Current Account

  • The New 123 Current Account pays cashback on household direct debits
  • 1% cashback on water and council tax
  • 2% cashback on electricity and gas
  • 3% cashback on mobile, home phone, broadband and paid for TV packages
  • New 123 Current Account pays also pays in-credit interest
  • 1% AER on the entire balance, once the customer’s balance is £1,000 or over
  • 2% AER on the entire balance, once the customer’s balance is £2,000 or over
  • 3% AER on the entire balance, once the customer’s balance is £3,000 or over (up to £20,000)
  • You are required to pay £2 a month (equates to 6p per day)
  • Your overdraft fee will be 19.9% EAR plus an unauthorised fee of £1 per day.
  • Get a cheque book and a Visa Debit card. You can use your Visa Debit card in shops wherever you see the Visa symbol and at virtually every cash machine in the UK and many worldwide. It also acts as a £100 cheque guarantee card
  • Access to your money 24 hours a day 7 days a week through our e-banking service, 750+ branches, 24-hour telephone banking service, LINK cash machine network or even by post
  • You must setup a minimum of 2 active direct debits
  • You must deposit at least £500 per month
  • This account is open to NEW and EXISTING Santander customers aged 18 and above (must be UK resident)

Santander Everyday Current Account

  • A simple and straightforward current account that helps make managing your money easy and convenient.
  • 0% EAR (variable) overdraft rate.
  • No Daily Arranged Overdraft Fees for the first 4 months when you switch to us (depending on circumstances. See representative example).
  • After 4 months the Daily Arranged Overdraft Fee will be 50p per day capped at 20 days each monthly statement period (if you don't switch these Daily Arranged Overdraft Fees will start from when your account is opened.)
  • Access to our dedicated Switcher Service - It is important that you feel confident about switching to us and what is involved. Click here for full details of our simple three-step process.
  • Easy access to your account 24 hours a day with our internet and phone banking service. Plus you have access to over 1,300 Santander branches.
  • No interest is paid on your balance.
  • You must be aged over 18 and live permanently in the UK.

Santander 123 Mini Current Account

  • The 1|2|3 Mini Current Account is designed to provide a safe environment to learn money management and take the first steps towards financial responsibility for those aged between 11 and 18.
  • With the 1|2|3 Mini Current Account you'll get:
  • Rewarding interest rates paying 3% AER/2.96% gross (variable) on balances from £300 up to a maximum of £2,000.
  • £100+ = 1% AER
  • £200+ = 2% AER
  • £300 - £2000 = 3% AER
  • 24/7 access to your account via Online, Mobile and Telephone Banking.
  • Access nationwide via our branch network.
  • Free text and email alerts about your account.
  • The choice of a cash card or a Visa debit card.

TSB Classic Account

TSB
  • Free banking - no charge for everyday transactions when you’re in credit.
  • You will receive a debit card with your account
  • Manage your money 24 hours a day through Internet Banking, Telephone Banking and Mobile Banking.
  • Money Planner is a free, easy-to-use Internet Banking service that introduces a new way of keeping track of your money across your TSB personal current and credit card accounts.
  • £25 interest-free planned overdraft. (Subject to application and approval).
  • £10 overdraft buffer. No overdraft fees or interest to pay if you go overdrawn (either Planned or Unplanned) by £10 or less.
  • Grace period if you go over your limit. You have until 3.30pm (UK Time) to pay in enough money to avoid any overdraft fees you may incur that day.
  • Switching to us in just 7 working days – We can help to move Direct Debits and standing orders from any existing accounts to your TSB current account.
  • Access to over 600 branches and a network of ATM's worldwide

Natwest Select Platinum Current Account

NatWest
  • Pay £16.00 per month and get the following benefits:
  • Green Flag car breakdown cover - even on your driveway
  • Mobile phone insurance – including all smartphones
  • Annual worldwide travel insurance - Members and their partners aged 70 years and over must pay an additional annual premium of £50
  • Travel benefits – discounts on holidays, flights and hotels