In a move that is sure to be unpopular, Santander have increased the monthly account fee on their 1|2|3 Current Account. And not just increased it, more than doubled it from £2 to a staggering £5 a month!
The new monthly account fee takes effect from mid-January 2016 giving consumers time to contemplate switching their current account if they think Santander has gone too far.
There is no doubt that the 123 Current Account from Santander is good value for many of the bank’s customers. If you have a number of regular household direct debits going out, you can earn 1%, 2% or 3% cashback on some of the common bills like mobile phone, electricity, gas, or council tax.
With the old £2 monthly account fee, the income from cashback would usually be more than covered. A rise to £5 per month will have the bank’s customers getting their calculators out to see if they will still be in the black.
Santander have attempted to justify the hike in monthly account fee by claiming that savings interest rates have decreased and it is costing them more. Even though interest rates have been at rock bottom and steady for several years. And the whole tone of the letter seems to be prompting people to reconsider whether a 123 current account is still right for them.
Those receiving little cashback from household bills and people who only have small amounts of money in their 123 current account that earn little to no interest, will have to seriously consider whether their current account is actually costing them money.
After all we are talking about an increase of £36 per year, from the old £24 per year to the new £60 per year.
Here’s their full explanation.
We want to let you know about a change we’re making to your 1|2|3 Current Account. From 11 January 2016, the Monthly Account Fee will increase from £2 to £5 per month. All other account features, including cashback and interest, will remain the same.
Why we’re making this change
Since the 1|2|3 Current Account launched back in March 2012, we’ve introduced enhancements such as the 1% cashback on Santander monthly mortgage payments and 1|2|3 World Offers, which give you access to a range of preferential rates and discounts. In the three years since launch we haven’t made any changes to the interest rates or Monthly Account Fee.
During this period, savings rates in the market have fallen considerably and have remained low for some time. Due to the impact of this market change, and other changes in the banking industry, we now need to increase the Monthly Account Fee so that we’re able to maintain the benefits that the account offers you.
Making sure your 1|2|3 Current Account is right for you
It’s important to make sure that your 1|2|3 Current Account is still right for you, as you’ll be paying an extra £3 per month. We want to ensure you make the most of your account, so here’s a reminder of the benefits.
You can maximise your earnings by making sure that you’ve set up all qualifying Direct Debits on the account and that you’ve making the most of the credit interest. Don’t forget that as a 1|2|3 Current Account customer you also have access to 1|2|3 World Offers which aren’t available with other Santander current accounts.
How to check how much cashback and interest you earn
You can check how much cashback and interest you earn each month by taking a look at your monthly statement. It provides your overall earnings for the month and since opening your account, as well as individual monthly totals for cashback and interest. You’ll also find this information when you log on to Online Banking or Mobile Banking. We’ve included an example statement on the last page of this letter so you can see exactly where this information is displayed.
To check how much cashback and interest you could earn in the future after the Monthly Account Fee changes to £5 on 11 January 2016, please use the 1|2|3 calculator.
What to do next
Nothing is changing immediately, giving you time to decide if your 1|2|3 Current Account is still right for you.
If you don’t accept this change, or feel this account is no longer right for you, you can transfer it to another Santander account (details of other current account options are listed on the next page) or you can close it at any time without charge.
We hope you feel that your 1|2|3 Current Account is still right for you. If you’re happy to keep using it then you don’t need to do anything, we’ll assume you’ve accepted the changes, and the Monthly Account Fee will change automatically.