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Stephen Jones

Review: New Santander 123 current account


A new cashback current account from Santander is promising to offer a radical change in the way customers earn returns on their money.

Woman using a calculator

With interest rates stuck at record lows, one bank is offering customers a creative new solution – cashback on household bills.

And what’s more, it’s also paying up to 3 per cent annual interest. This is far more than most high-street banks are paying out at present.

Cashback bonanza

The new Santander 123 Current Account offers some eye-catching cashback returns on basic bills:

  • 1 per cent on water and council tax

  • 2 per cent on electricity and gas

  • 3 per cent on mobile, home phone, broadband, and paid-for TV packages.'s calculations suggest the average customer could expect a return of around £72 a year from these cashback incentives alone.

However, that figure could rise substantially for those with more bills tied to their account, such as parents also paying their children’s mobile phone bills.

More to it than cashback

While the cashback on offer is undoubtedly a nice reward, those bonuses pale into insignificance when compared to the potential interest on offer:

  • 1 per cent on the entire balance, once it reaches £1,000 or over;

  • 2 per cent on the entire balance, once it reaches £2,000 or over;

  • 3 per cent on the entire balance, once it reaches £3,000 or over (no interest paid on balances over £20,000).

These rates offer a pretty competitive instant-access option for savers with fairly large amounts to put away.

Maintaining the maximum £20,000 balance would see you gain £600 in interest over the course of a year – a return that few savings products on the market could match.

And that’s before the added cashback benefits are included.

So what’s the catch?

As you might expect, this attractive offer doesn’t come without its drawbacks.

For starters, you’ll have to pay a £2 monthly fee for the account. This would be most punishing for customers depositing less than £1,000, who would receive no interest whatsoever.

It’s also worth noting that, to be eligible for the product, customers must be able to deposit a minimum of £500 a month.

In addition, the question of customer service is never far away when it comes to Santander.

Last year, readers of Moneywise magazine voted the Spanish bank worst for customer service for the second year in a row.

And while the firm says overall complaints fell 19 per cent between 2010 and 2011, some may still be cautious about taking the jump across.

Finally, if you’re looking for an overdraft, the costs of the 123 account may well outweigh any benefits as arranged overdrafts are charged at a hefty £1 a day (up to a maximum of 20 days per month).

The charges on unarranged overdrafts are steeper still at £5 a day, plus additional one-off fees.

As a result, if shifting debt is your priority, you may want to look at alternatives such as Santander’s own Everyday Current Account or a 0 per cent balance transfer credit card.


Nerys Lewis, head of credit cards and savings at, says: "There’s no doubting that Santander have come up with an impressive offer with the 123 Current Account.

"It’s also refreshing to see that the product has no gimmicky introductory bonuses – instead the benefits will remain year after year.

"However, it’s also worth noting that the account is not likely to suit everyone, so it’s important to do some quick sums to work out what will give you the best returns.

"If you’re a couple that shares bills but not current accounts, you could be canny by having only one of you opening the account.

"You can then set all direct debits out of that account to maximise the cashback, but limit any monthly fees."

Find out more

Click on the link to find out more about the Santander 123 current account, including a cashback calculator where you can work out how much cashback you can expect to receive.

But before making the switch, make sure you compare current accounts to ensure you’re getting the best account for your needs.


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