Thousands of Santander customers are set to pay more for their current accounts with a brand new monthly fee increase arriving in just a few weeks. The bank has confirmed that holders of its 1|2|3, Select and Private accounts will see their monthly charges rise from £4 to £5 from May 11. That means UK customers will be paying £60 a year to maintain the account.
Select and Private customers will also see the APR on overdrafts over £500 change from 27.06% to 28.33% (variable). While the 1|2|3 account closed to new customers in 2023, many existing customers still hold accounts.
The Santander 1|2|3 Current Account offers 2% AER (variable) interest on balances up to £20,000. To receive this, you must pay in at least £500 per month and have at least two active Direct Debits.
Customers can receive up to 3% cashback on water bills, 2% on gas and electricity, and 1% on council tax and similar payments.
There is a monthly cap on cashback, meaning the total amount you can earn is limited, even if your bills are higher.
Andrew Hagger from MoneyComms told The Sun: “Even though the fee is increasing by £1 per month, this should still be covered by the cashback on bills for most people.”
Rachel Springall from Moneyfacts also told the news outlet that loyal customers will feel “disappointed” over the increase.
She said that because cashback earnings vary depending on household spending, it is “vital users keep on top of their outgoings and calculate if the account is still worth having.”
The finance expert added that now could be the ideal time for customers to “switch and ditch”.
Santander is currently offering a £180 switching bonus plus a £25 Amazon gift card via some sites for people moving to their newer Edge or Everyday accounts.