Santander doubles fee on its 123 Lite account and slashes cashback
The monthly charge for the deal is going up from £1 to £2
Thu, 07/23/2020 – 10:22
Santander is doubling the fee on its 123 Lite account from £1 to £2 per month from 27 October.
Customers with 123, 123 Lite, Private and Select current accounts will also see their cashback changed.
The changes will be introduced on 27 October.
What changes are being made?
From 27 October Santander will change two household bills categories where customers get cashback on bills paid from the 123, 123 Lite, Private and Select current accounts.
Those paying bills via direct debit from their Santander account will see water bills moved from cashback of 1% to 3%.
Communications bills such as phones and broadband/TV packages will move from cashback of 3% to 1%.
Cashback on other household bills paid from these accounts, such as gas, electricity and council tax, will remain unchanged.
The monthly fee for the Santander 123 Lite account will be increased from £1 to £2 per month on the same date. The fee for the 123 Current Account will remain at £5 per month.
Cashback from 27 October
1% – Council tax, Santander mortgage, communications(phone/internet/TV packages)
2% – Gas/electricity, Santander insurance and protection
3% – Water bills
Cashback is capped at 5% on each tier, meaning you can get a total of 15% cashback.
Why are the changes being made?
Santander says it has to act due to the rising cost of its cashback scheme.
The bank pointed out that historically low interest rates, the coronavirus pandemic and ongoing regulatory changes have also had an impact.
Susan Allen, head of retail banking at Santander, says: “It has been a very difficult decision to make these changes to our popular 123 accounts but both the 123 and 123 Lite current accounts will continue to be good options for the large majority of our customers with the value they still offer.
“123 is the only account on the market offering both in-credit interest and cashback, while both 123 and 123 Lite accounts give cashback on essential household bills paid by direct debit.”
Santander will be writing to all customers during July and August 2020 to explain the changes.
Those whose returns do not meet the monthly account fee will be offered alternative account options.
The Santander 123 account was originally launched with an interest rate of 3% but was cut to 1.5% in 2016.
It slashed the rate on its 123 current account from 1.5% to 1% on balances up to £20,000 on 5 May this year.
From 3 August Santander will be reducing the interest rate on its 123, Select and Private Current Accounts to 0.6% per annum on balances up to £20,000.