Santander 123...I mean 1.5
This month Santander announced that its flagship current account will only offer a flat rate of 1.50% interest on balances up to £20,000 from 1st November 2016. This is clearly bad news for savers with money in the account or for those about to open one, two or three.
The cut halves the 3.00% rate the account previously offered on balances between £3,000 and £20,000, but is it really that bad compared to offerings from other banks or building societies?
There always have been, and still are, better current account rates for small balances. For example TSB and Nationwide currently offer 5.00% on balances up to £2,000 and £2,500 respectively (plus all the rules that go with them of course!). But this does not help those with £20,000, £40,000 or £60,000 which is where the Santander account was the shining light.
So what are the options if you have say, £20,000 - £60,000, want no risk to capital, full Financial Services Compensation Scheme (FSCS) Protection and access to your money without delay or penalty?
Well, here it is (please don’t shoot the messenger!).
Tesco Bank Easy Access 1.07%
National Counties Building Society Easy Access 1.11%
You can get slightly more for your money if you are prepared to wait for withdrawals:
Bank and Clients 6 Months’ Notice 1.60%
Charter Savings Bank 95 Days’ Notice 1.36%
Even if you tie your money up for 1, 3 or 5 in Fixed Rate bonds it doesn’t get much better:
Paragon Bank 1 Year Fixed 1.35%
Close Brothers 3 Year Fixed 1.70%
Aldermore 5 Year Fixed 2.00%
Overall then, the 1.50% offering from Santander 123 has not made anyone happy and is not exciting, but it is still very competitive. The rate also doesn’t drop until November. At this time other banks and building societies may follow suit and drop their rates…reviewing the landscape as 1st November approaches should be in your diary!
So the message for now is not to be hasty. Many of us feel Santander have been naughty but the fact is, 1.50% for a current account, with interest added monthly, and full FSCS protection is still good. It still offers a legitimate home for short term and rainy day savings.
The real question is where you should put your money for the longer term. If you want the opportunity of better returns than the above you will need to accept some risk to capital. Taking a suitable level of risk with your money is down to an individual’s preference and their circumstances. Advice should always be sought and as most of you know, HDA are experts in this area.
To discuss further or to arrange a face to face meeting please contact us.