Santander more than doubles its 123 fee
Some 3.6 million Santander customers will be hit by fee increases on the bank's flagship 123 range.
The cashback offers on the current account and credit card will not change for existing customers. However, credit card cashback will be capped for new customers. The 123 credit card pays 1% cashback on supermarket shopping, 2% on spending in department stores at 3% on transport. From January, each element will be capped at £3 a month.
According to Santander's latest annual report, some 3.6 million people in the UK held at least one 123 product in 2014 and Santander increased its current account users by 47% over the year.
Nicolas Frankcom, money expert at uSwitch.com <http://www.uswitch.com/banking/> , says: “An almost threefold increase in fees is a huge kick in the teeth for Santander 123 customers. Many will feel cheated by Santander moving the goalposts, and those drawn in by tempting cashback offers will have to spend more on household bills just to break even. However, it's worth noting that Santander still pays a respectable 3% interest on balances between £3,000 and £20,000."
The current account is now much less attractive for smaller balances. Interest on deposits of less than £3,000 won't cover the monthly fees, even for people who don't pay tax on their interest.
The cashback scheme remains attractive and people with large balances will still get plenty value from the account. Someone with the optimal £20,000 balance will get £540 interest before tax, after paying fees.
An account opened with a clearing bank (few building societies offer current accounts) that provides the ability to draw cash (usually via a debit card) or cheques from the account. Some pay fairly minimal rates of interest if the account is in credit. Most current accounts insist your monthly income (salary or pension) is paid directly in each month and they offer a number of optional services – such as overdrafts and charge cards – which are negotiable but will incur fees.
Used by the holder to buy goods and services, credit cards also have a monthly or annual spending limit, which may be raised or lowered depending on the creditworthiness of the cardholder. But unlike charge cards, borrowers aren’t forced to pay the balance off in full every month and, as long as they make a stated minimum payment, can carry a balance from one month to the next, generating compound interest. As the issuing company is effectively giving you a short-term loan, most credit cards have variable and relatively high interest rates. Allowing the interest to compound for too long may result in dire financial straits.
All limited liability companies registered in the UK are compelled by law to compile a report once a year on the company’s accounts and directors’ statements must be issued to shareholders and filed at Companies House. A report details a company’s activities throughout the preceding year and its contents will include chairman’s statement, auditor’s report and detailed financial information such as cash flow and balance sheet statements.