Santander ups fees on “123” current account

Santander UK’s 123 products have attracted hundreds of thousands of customers from Britain’s “big four” banks – Lloyds, Barclays, HSBC and Royal Bank of Scotland – and attracted the highest number of “switchers” after rules were changed two years ago to make the process easier.

“Most of our customers are using it for the interest rates and the average cash back will get is £9, which continues to be more than the fee”, the spokesman said.

From January 2016, the cost of the current account will rise from £2 a month to £5, while fees on the linked credit card will go up from £2 to £3.

According to Santander’s latest annual report, some 3.6 million people in the United Kingdom held at least one 123 product in 2014 and Santander increased its current account users by 47% over the year. In fact research published earlier this month suggests 55 per cent of people find it impossible to determine the value of their account, in terms of cost and what they receive in return. To qualify customers must stay in credit, deposit £750 a month into the account and switch over at least two direct debits.

First Direct are also paying you if you switch, giving new customers £100 to join them.

The announcement comes just a few weeks ahead of the initial findings from the competition authorities on retail banking in the UK.

Critics said the moves “made a mockery” of the Santander’s advertising strapline: “simple, personal, fair”.

Capital One has already scrapped the perks on its playing cards and Tesco is chopping its personal in November.

The current account is now much less attractive for smaller balances. They need to have at least two direct debits.

The Santander 123 account, with its 3% interest on balances between £3000 and £20,000, seemed to offer a viable alternative, but the new charges will largely negate those benefits.

Charges for the bank card, which presents as much as three per cent cashback on spending, will rise from £24 to £36 a yr.

You are very likely to have the wrong bank account.

Mr Lewis, founder of MoneySavingExpert.com, has advised savers to use the account instead of Isas, where interest rates have fallen to record lows.

Santander can also be growing the charges on its essential bank card after European Union legal guidelines lowered the income banks might make from every transaction. However from October, the utmost “interchange” price charged to outlets shall be zero.3pc of the acquisition worth, down from zero.7pc on common as we speak.