123 account rate to be cut to 1%

[orangesrule]

So for the past 5 or 6 years, I've had circa 20k in a 123 account, with the rate and benefits gradually decreasing. Its now dropping to 1%, whilst maintaining the £5 charge.

Pretty loathed to keep it in there.

Options include:
Top up premium bonds from 30 to 50k (maximising likely hood of 'wins')
start withdrawing funds and topping up vanguard equity 60 ISA, not too sure on exposing a lump of savings to risk.


Do i have any other options? maybe a Marcus account? Any other thoughts?

[m_cozzy]

Cheers for the heads up. I hadn't seen this. Drops in May apparently.
I had 2 at 40k back in the day when they were 3%. Not worth continuing so watching this thread & will check out martins money for suggestions. This was my slush/emergency money account.
Likely to spread mine between premiums bonds & my s&s isa.

[RizzoTheRat]

The introductory rate on my Marcus has just ended so I'm down to 1.35% on that now which isn't exactly great either.

I like that my 123 credit card doesn't charge for overseas use, and Santander is about the only UK bank that works with Gamin Pay, but I just don't think my 123 is worth it now.

[JulianPH]

Marcus is still your best bet for instant access accounts.

[georgefreeman918]

RizzoTheRat said:

The introductory rate on my Marcus has just ended so I'm down to 1.35% on that now which isn't exactly great either.

I like that my 123 credit card doesn't charge for overseas use, and Santander is about the only UK bank that works with Gamin Pay, but I just don't think my 123 is worth it now.

If your like me, you will get cashback on your 123 credit card? I use it for fuel and weekly food shops. The cashback covers the monthly fee (£3) and then a couple more pounds. I don't think that cashback rates are affected on credit cards?

I have pulled mine out of a 123 current account and gone with Nationwide (5% up to £2,500) for the next 12 months. Misses has one, and we have a joint which should be a nice little interest earner over the year - better than nothing! Anything left has gone into Marcus.

[RizzoTheRat]

georgefreeman918 said:

If your like me, you will get cashback on your 123 credit card? I use it for fuel and weekly food shops. The cashback covers the monthly fee (£3) and then a couple more pounds. I don't think that cashback rates are affected on credit cards?

I used to get good cashback as I had my mortgage with them as well but now I've paid that off and a change of job has cut down the commuting so no fuel cashback either.

[anonymous-user]

RizzoTheRat said:

The introductory rate on my Marcus has just ended so I'm down to 1.35% on that now which isn't exactly great either.

Same here, annoyed I missed out on the 1.45% renewal by a couple of days. My parents used to have three 123 accounts between them with £20k in each, would love to be able to get that sort of return now!

I keep most of my money in my Marcus and only have day to day money in my 123 account. A am very temped to convert it to the light version which is £1 a month and not get the tiny interest.

[red_slr]

So about £9/mo on £20k... after basic rate tax.
Yeah right ok then.
I cant see Santander being anywhere near as popular in the next few years.

[Sir Bagalot]

When they dropped the rate before it simply wasn't worth , I keep it now for the cashback and simply pay in enough to cover the DD's

[anonymous-user]

red_slr said:

So about £9/mo on £20k... after basic rate tax.
Yeah right ok then.
I cant see Santander being anywhere near as popular in the next few years.

Very tempted to change to HSBC as they are offering £175 to change, setting up the £250 a month at 2.75% savings account and stick the rest in my Marcus each month.

Lets be honest, none of the banks really want our cash anymore, hording money is not good for the economy. I suspect banks have been given the nod rates are falling in the next few months and are getting ready for this.

[RizzoTheRat]

I've just seen that the Dutch bank ABN AMRO are dropping the interest rates to 0%, although as I currently get 0.01% on my account I probably won't notice the impact.

Anyone with €2.5m or more in the bank will have to pay 0.5% on anything above that for them to keep hold of it for them Banks really don't want our money!

[NickCQ]

Joey Deacon said:

I suspect banks have been given the nod rates are falling in the next few months and are getting ready for this.

I don't think that's how it works...
They look at the forward curve like everyone else and see what the market thinks.

[bmwmike]

Thanks for the heads-up. I've been looking at the Santander account recently thinking I must do something with that money. No way is it sitting there doing even less! I'll chuck it in stocks and shares ISA I think.

[KTF]

Sir Bagalot said:

When they dropped the rate before it simply wasn't worth , I keep it now for the cashback and simply pay in enough to cover the DD's

I assume you have dropped down to the lite version as well?

[mikeiow]

It does rather feel like the banks don't want to do anything special to entice custom. I guess an effect of the low interest rate economy we live in. Stick it all on black!

[55palfers]

...and they have put their overdraft rate up to almost 40%

I wonder why we hate the banks.

[bmwmike]

55palfers said:

...and they have put their overdraft rate up to almost 40%

I wonder why we hate the banks.

...and dropping the cashback rates.

I was going to buy a new car, rather than take finance I'll lend myself the money at 3% interest. Done that in the past and it works really well if you stick to it.

Also shop around for best deals on utilities.

Overpayment on mortgages.

No point holding cash if there are debts, I guess.

[Elderly]

red_slr said:

So about £9/mo on £20k... after basic rate tax.
Yeah right ok then.

I don't think it's even quite as 'generous' as that.

£20k x 1% gross = £200
£200 less 20% = £160
£160 less 12 x £5 monthly fee = £100

That makes it net ........................0.5%

Question. Assuming that the interest earned is taxable - is the account servicing monthly fee tax deductible?

Edited by Elderly on Tuesday 14th January 16:48

[Fastpedeller]

What's it called now? 1,1,1,??

[Simpo Two]

RizzoTheRat said:

Anyone with €2.5m or more in the bank will have to pay 0.5% on anything above that for them to keep hold of it for them Banks really don't want our money!

Once upon a time the more money you had invested the higher the interest rate - which was logical. The banks wanted your money so they could lend it out and make a profit.

Now the situation has inverted - the more you have the lower it gets. Is that connected with the 2008 crisis and if so how? I know that banks need to keep more capital but that doesn't explain it, at least not to my reptilian brain...