Santander, the stand out performer when it comes to current account switching this week announced an increase in the 123 current account monthly fee from £2 to £5 with effect from January 2016.
The cashback returns on utilities payments and in credit interest rates have not been changed, however the increased fee takes some of the shine off this deal, particularly for those customers with smaller credit balances.
For someone with a smaller balance it could be a game changer – if you have a £3,000 balance you’ll earn £90 per year (£72 after 20% tax), but will be paying out £60 in fees – thus giving you just £1 per month benefit.
There’s a higher fee in the pipeline for Santander 123 credit card holders too with the fee increasing from £2 per month to £3 per month also from next January.
If you’re considering an alternative in credit bank account then it may be worth a look at Tesco Bank.
The Supermarket bank also pays 3% on balances up to £3,000 and whilst it doesn’t offer rewards on utilities payments like Santander, there’s no monthly fee plus it has just dropped both the £750 minimum funding limit and £5 charge that was levied if you paid in a smaller monthly sum.
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