Santander launches '123 Lite' bank account paying 3% cashback
Current account switchers have more choice over where to move their money following the launch of Santander’s new ‘123 Lite’ account.
Like Santander’s popular 123 account it pays cashback of up to 3% on certain bills paid by direct debit from the account.
However, unlike the original 123 account, which pays up to 3% interest on balances of up to £20,000, you won’t earn any in-credit interest with the new Lite offering.
The account is cheaper as a result with a fee of £1 a month, compared to £5 with the original 123 account.
- See this week’s best current accounts.
123 Lite features and eligibility
Key features of the 123 Lite account include:
- 1% cashback on water bills, council tax bills, and on the first £1,000 of your monthly mortgage payment – if it’s a Santander mortgage.
- 2% cashback on gas and electricity bills, and on Santander home insurance policies (that are administered and underwritten by Aviva).
- 3% cashback on mobile, home phone, broadband, and paid-for TV bills.
- Up to 15% cashback on direct debit spending at certain retailer partners, which you choose in advance of spending.
- Access to 123 World for preferential rates on other Santander products.
However, to be eligible for cashback, you must:
- Pay in at least £500 per month.
- Have at least two active direct debits going from the account.
- Log on to either online or mobile Banking at least once every three months.
- Pay the £1 monthly account fee.
Switching figures down
Andrew Hagger, of comparison service Moneycomms, says the account launch comes as Santnader experienced dismal switching figures in the last quarter of 2015 – data which was released today.
“Over the last seven quarters (from the start of 2014) Santander averaged a net 52,504 new customers per quarter, however for the final quarter of 2015 this figure slumped to a net influx of just 3,592 new switches.
“The launch of a 123 Lite current account from Santander makes me wonder whether the bank realised that it needed an alternative product for those with a smaller credit balance where the credit interest is currently being severely eroded by the higher £5 monthly fee.”
The bank upped its 123 current account fee from £2 per month to £5 month this January, but the change was announced in September of 2015.
If you’re thinking of getting the Lite account, the key is to work out how much you would earn in cashback depending on your individual spending, and then compare it to what you could earn with other bank accounts.
- Use our tool to compare current accounts.
The four key points to check when considering switching to another current accounts are:
- Does it offer in-credit interest? Up to 5% is available.
- Does it give you a switching bonus? Up to £220 is available.
- What are the overdraft fees? £250 interest free overdrafts are available
- Does it offer good customer service? See our 2016 Customer Service Awards for the most trusted providers as voted for by you.
An overdraft is an agreement with your bank that authorises you to withdraw more funds from your account than you have deposited in it. Many banks charge for this privilege either as a fixed fee or charge interest on the money overdrawn at a special high rate. Some banks charge a fee and interest. And other banks offer a free overdraft but impose very high charges for exceeding the agreed limit of your overdraft.
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.