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Santander 1|2|3 v The Rest (Revisited)

October 2016

Finger climbing a mound of coinsEven more reasons to ditch Santander 1|2|3
In July we showed you how it was possible to earn nearly £370 more each year by spreading you and your partners £20,000 of savings around several different current accounts providers rather than stashing it all in one Santander 1|2|3 current account.
Since then Santander have announced that they will be slashing their Gross interest from 2.96% to 1.49% from 1 Nov. So now there are £663 worth of reasons to ditch Santander.

Let's see how the numbers will stack up after 1 November;

Option One:
Santander 1|2|3 current account pays 1.49% gross interest on £20,000 = £298 interest per year.
You have to pay £5 a month compulsory fee, so that's -£60 a year.
That brings the interest down to £238, which means a truer interest rate of 1.19% Gross.

By 'spreading' that £20,000 around, you could have;

Option Two:
3x (1 account each & 1 joint) Nationwide FlexDirect Accounts paying 4.89% interest on £7,500 = £366.75 interest per year.
3x (1 account each & 1 joint) TSB Classic Plus Accounts paying 4.89% interest on £6,000 = £293.40 interest per year.
1x Club Lloyds Account paying 3.93% Gross interest on £5,000 = £196.50 interest per year,
and the final £1,500 in a Tesco Bank Account paying 2.96% Gross interest = £44.40 interest per year.
The total interest when spread over these 8 accounts = £901.05, which is an average interest rate of 4.5% and a mahoosive £663.05 more interest than lumping it all in one Santander 1|2|3 account.

With either option you will need to set up 2 Direct Debits, as this is a condition for both the Santander & Lloyds Accounts. You'll also need to meet minimum monthly payments (except Tesco where no minimum payment is required). For Santander it's £500, and for the 2nd 'spreading' option it varies between £500 & £1500, dependant on the Bank. But that can also be done with £500 and move it around, multiple times when required, by setting up standing orders between the different banks and accounts. But there are now 663 reasons to make that little bit of effort. Do it!

(Visitor) JEAN commented :
LLoyds and Tsb are also reducing their interest rates by 2% so it rather changes things.  Would someone like to recalculate?
(Administrator) BlogMan replied :
Thanks Jean you are right. These latest cuts will take effect in the New Year. We have been crunching the numbers and you can see the results in the latest Blog entry.

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