Money saving expert Martin Lewis’s warning over ‘dead duck’ bank account

Santander changed the banking world when it introduced the 123 account.

Paying more interest than most savings accounts as well as offering cashback on bills, it shot to the top of best buy tables.

As recently as last week, Moneysavingexpert.com founder Martin Lewis was telling people to check it out for a good deal.

But changes announced today turned it into a "dead duck".

"For years it was my top picks for savers, with a generous 3% interest on up to £20,000 in it, and a cashback boon that left many earning an extra £5 – £10 a month on top," Martin said.

"Then it cut interest to 1.5% – so while it wasn’t as hot, it was still in the mix."

And now?

"Santander 123 is now a dead duck current account. There’s little reason for anyone to stick to it," Martin said after seeing the latest changes planned.


  • Santander slashes benefits on top bank accounts and hikes overdraft fees to 39.9%

  • Your overdraft just changed and millions of people's available funds just hit £0

From 5 May Santander said it would cut in-credit interest on its 123 account from 1.5% to 1% – as well as limiting how much cashback you can get from paying bills to £15 a month.

The monthly fee would be unchanged at £5 though.

Martin pointed out that at 1% it's easy to find higher interest rates elsewhere, even with an easy-access account, and you can keep the cashback for a lot lower fee.

"Simply shift your savings to the top easy access account, and either grab over £100 free shifting to a top current account or move to the Santander 123 lite account, where you pay just £1 a month for the same cashback," he said.

"Its overdraft changes too aren’t great either, shifting to 40% APR, which is fast becoming the new normal rate for all banks, on the back of the FCA’s regulation changes.

"Then again this was never really an account suitable for those who are overdrawn, its big sell for was savers."

And with a savings rate that's now well below the top easy-access accounts, it's time to move.

"With lower interest there's simply no point," Martin tweeted.

Santander said nine customers in ten won't be affected by the new cashback cap, while just 2% of customers would pay more in fees than they'd get in interest and cashback after the changes.

The bank said is will write to customers of accounts, to explain the changes, while details will be included in monthly statements and on Santander’s website.

Santander head of retail banking Susan Allen said: “While we have had to make some difficult decisions in the current environment, our current account range remains very competitive.

"Our flagship 123 Current Account continues to offer great value, with customers able to earn up to £379 per year in interest and cashback for an account fee equivalent to just £60 a year."

“Our 123 accounts provide a range of benefits that we know our customers value and our goal is to ensure these accounts remain sustainable for the future.”

You can see how much cashback and interest you're currently earning by logging in to online or mobile banking or on your monthly account.

Santander said it would provide information on alternative account options for customers who will now end up paying more in fees than they get in cashback or interest.

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