Santander’s 123 current account – should you switch?

Santander’s  123 current account offers a great rate of interest, so should you switch? Banks have just introduced a new Switch service which aims to make it easier, faster and less error-prone to switch current accounts. The main advantages of this are that:logo for new account switiching service

  • all banks operate an identical service
  • it will complete in 7 days
  • your new bank sorts out all problems, so you have a single point of contact
  • for 13 months after the switch any payments or debits that would have gone to your old account will be sent on to your new account
  • you are guaranteed to be refunded any interest or charges that happen if something goes wrong.

So if you have been putting off switching by the thought of the endless hassle and problems, this might be a good time to look at the range of current accounts around and see if one would be a big improvement on your existing current account. This Guardian article looks at the best current accounts depending on whether you ever go overdrawn or not.

Santander’s 123 account

1 2 3 account logoIf like me you are struggling to find easy access savings accounts that pay more than a pathetic rate of interest, you should take a look at Santander’s  123 current account and consider keeping a very large balance in there:


  • pays 3% interest on balances between £3,000 and £20,000
  • gives cashback on household utility bills – 1% on council tax and water rates; 2% on electricity and gas bills; 3% on mobile, phone, broadband and TV bills.

There is a calculator here that let’s you see how much money you will make from the interest and the cashback. Of course, tax will have to be paid on the interest, but the cashback is not taxable.


  • you have to pay in £500 a month and set up at least 2 direct debits, so you can’t use it as a pure savings account
  • there is a monthly charge of £2 a month. This is easily outweighed by the interest if your balance is over £3,000, even for a higher-rate tax payer.
  • it’s Santander, the bank with the worst reputation for customer service in Britain. To be fair, this seems to have been improving a lot over the last year, but it’s hard to forget.
  • the overdraft charges are huge. This is not a good choice unless you are sure that you will always be able to leave a large balance in there.

So am I going to switch current accounts? Well no, as a CAB advisor it’s really hard for me to ignore Santander’s poor customer service reputation. But I have decided to put my toe in the water and open a 123 account. I am going to treat this as a savings account except I will use it to pay my council tax and utility bills. If I like the account and the customer service, then I will move over fully later.


  1. premierfellas says:

    I’ve had the 123 account for much of the year, and have been using it as a secondary savings account with only the DDs that earn cashback transferred to it (although I have also transferred the monthly savings standing orders that go to other savings institutions as well, knowing that those are easily switched elsewhere should issues arise). The poor customer service history (not just anecdotal – I’ve suffered it myself in the past).

    The only issue I have had is on almost every occasion that I have sent a first-time one-off faster payment, it has bounced back, completing only when Santander resent it the following day. I suspect this is some sort of security thing that is being triggered, but on each occasion that it happened I input the correct OTA code sent to my phone (payments were sent to different payee banks, so I’m 99% certain that Santander is the issue, not the receiving bank).

    Whilst this continues they have zero chance of me fully transferring my main current account as I have no confidence in their Faster Payment system, but the account works fine as a good secondary cashback savings account (with a monthly reminder in my calendar to meet the funding requirement).

    • very interesting – you are the second person I have heard comment that the ‘security’ is a nuisance. It sounds as though I too may be keeping it as a secondary account.


      • Alan Kilham says:

        I agree – their security is a REAL nuisance. Over zealous and a ‘pain in the bottom’ to resolve.

        • Gethin Bermingham says:

          I went to Morocco after making arrangements to use my 123 MasterCard. When I came to use it, I found it was blocked. I rang the help line. Each call produced a different reason for the block. No help was offered. I was told I would not be able to unblock it until I got home. I had no other card with me. I could not pay my hotel bill.
          I am just now closing my 123 account down.

  2. I have had this account since May as a joint account with my parter for our household bills and general joint costs. The main gain really is that it pays 1% cashback on our mortgage payment – which is £680pm, so £6.80, far outweighing the £2pm fee.

    We have netted about £18pm since opening it – cashback and net interest (we will need to pay some extra tax on this as OH is a higher rate tax payer, though I am not, so we’ll have to pay an extra 20% on his half). We tend to have over £3k in there for about half the month but I don’t like seeing a big [available] balance, so, despite the interest it suits me better to move this out of view to a ‘savings’ [almost no interest, grrr] account.

    The customer service aspect – they have got better I think and are very open to feedback now. On the phone they are mainly very good and you get calls and follow up letters if you raise any issues. The email questions never get a sensible answer so I would avoid bothering with those. Which is a shame as, of course, sending an email (secure message) is free.

    As for security – setting it up was a nightmare, but in fact, once it’s done, it’s fine. I couldn’t log in from any random device though as I could never remember my long number (see, I can’t even remember what they call that!) but it’s fine on the PC at home and they do have telephone banking too.

    As for faster payments, I’ve not had any problem at all with these. I send one each week to our veg box chap and there’s at least one thing a week, sometimes more often, I have to pay myself back for (I have the S’der 123 credit card so I use that for our grocery purchases which attracts 1% cashback then transfer the money back to myself from the joint current account where the budgeted funds sit – I know it sounds onerous but I think t’s worth it in these days where we get so little interest on anything). I’ve never had any payment bounce or not complete.

    • Bouleversee says:

      Have you tried transferring amounts of £1k or more, even to accounts in your own name which are in your payments address book, i.e. done before? I have problems every time, same with cahoot (I think they use the same system). Their fraudchecking system is primitive compared to other banks.

  3. I also have one (and the 123 credit card) and couldn’t speak more highly of it. I’ve never had to use the customer service so can’t really comment on that aspect though.

    I use the account as my normal current account but also keep a lot of savings in there as well, and it works out well. Never had a problem with cashback, interest or payments not going through.

    With the current account cashback and interest and the credit card cashback I come out far better every month with Santander than I would with any other option in the UK market, except maybe the Lloyds Vantage accounts, which also pay 3% (but not to £20000!)

  4. Mick Marshall says:

    Santander seem to have a problem with processing payments. Last year I attempted to top up my cash ISA at Santander and they rejected my payment! After a second failed attempt, I moved the whole ISA to a competitor.

  5. Helpful information as I was just about going to use them.

    Just wondered if the details of your main bank account are given , can you specify which standing orders
    are to be transferred to the new account .

    • J Illingworth says:

      Just doing this myself. I have had an account since it was Giro bank (long time ago) then Alliance and Leicester and so on. Just changing to the 123 current account and yes you pick the standing orders you want on the account not the bank. I have been doing transfers etc with the old account for many years with no problems what so ever. I can only speak as I find but things have always been ok for me. My big mistake was not making it a 123 account sooner for the benefits it offers. I would say to you don’t be put off by other peoples comments look for yourself at the benefits to you because everybody’s needs are different.
      If you think Santander is hard you should try Natwest !!

  6. Delboy says:

    Set mine up last month after being with Nat west for 50 years, and getting no interest whatsoever,
    Brilliant seamless change, only fly in the ointment was when Nat west realised I was leaving, and decided I suddenly had joint account, soon sorted with an Apology. Customer service fine, Just make sure you fill in all your details correctly, web and app all work as I would expect . Security issues , better there than not.
    Go for it , you really will be laughing all the way to the bank

  7. OVERDRAFTS WERE NEVER EVEN DISCUSSED WHEN I WAS ADVISED BY MY LOCAL BRANCH TO SWITCH – BEWARE! I have now transferred back into my previous current account because of horrendous overdraft charges.

    OVERDRAFTS – Where you could really come unstuck though, is if you fail to keep firmly in the black. Even on arranged overdrafts, you will be charged a rate of £1 a day, capped at 20 days in each monthly statement period. So, if you are overdrawn for 20 days in the month, you will pay £20 (plus the £2 fee) for the account.
    If you venture into unarranged overdraft territories, things get a lot stickier as charges go up to £5 a day. And theoretically, there is no cap on unauthorised borrowing during each monthly statement period.
    For obvious reasons, Santander’s 123 current account is only suited to customers who remain strictly in the black. If there is any chance of you slipping into your overdraft, there is little point applying for the account as the combined charges and monthly fee are likely to wipe out the cashback benefit.

    • janet illingworth says:

      The obvious answer to this one is Don’t go over drawn. Live within your means!!!

      • Sensible advice from Smith. They do not make this obvious – in branch or on the phone they are only driven by sales targets – not your particular circumstances (which may include the odd dip into an arranged overdraft). Thought banks might have learned about mis-selling products??

  8. Referring to overdraft charges, there is not a bank in the world which will let you overdraw for nothing. You can make arrangements with your bank if you may need an overdraft. Santander gave me a £100 overdraft which I never asked for or have I ever used.
    Throughout my lifetime I have at sometime had a bank account with most of the UK banks. I can honestly say if you can find a better bank than Santander it sure must be something special. Apart from the interest and money back, which is unbeatable, there are so many branches with must better opening times for your convenience.

    I am pleased with their top security system, sometimes agreed , it can be inconvenient.
    But they are doing it for your best interest, there are so many crooks out there who would do anything to get hold of your money without a moment of compassion. So don’t knock security one day you will be pleased it is there.

    Someone got into my ebay password and started a business taking people’s money for mobile phones that did not exist. I have never been a seller. I started getting emails calling me all the names under the sun, so there was no security there. I had to infirm ebay myself.

    Rogues are a fact of life, so beware and thankful your money with Santander is being looked after.

  9. I moved my current account and 2 savings accounts to Santander under the Switch Guarantee. It did just what it said on the tin; everything was transferred on time (May 1). Absolutely no issues at all – on line, by phone, in person I’ve been dealt with professionally and honestly. Oh, and the £100+ in Cashback to date far outweighs the £2/month charge (I used to pay £9.50/month for Co-op)!!!

  10. Ive had an account with Santander for nearly 4 years, It is my main account and I have recently changed to the 123 Current account and obtained a 123 Credit Card to accompany it. I have never had any issues with Faster Payments or payments failing and any time I have contacted them, customer service has always been first class!
    In my opinion Santander is a great option compared to many other banks out there.

  11. JOHN IVES says:

    I have just been through the pains of opening a 123 account and trying to undertsnd the criteria. So the following may be useful for other readers. I say this as my aim was to open more than one 123 account.
    Firstly the monthly payment criteria should read. Each month each 123 account must be funded by at least £500 (per account month) . The only exceptions to this are internal Santander transfers from an account of an individual whose names appears in the 123 account. So if you have three 123 accounts i.e. husband and wife and joint , the husband or wife can fund one another’s account but not the joint. So to conform with this criteria I have my pension paid into my joint account and my wife and I just exchange standing orders. As regards direct debits , you need two debits from eligible companies to get cashback but if you have an account for interest on any old direct debit will do . What you find is that many internet savings accounts operate through a named bank account and in order to do this they set up a direct debit process. I opened a Tesco account which allows you to use more than one account . So with a little bit of knowledge if you want to invest up to £60K this can be easily achieved for a husband wife team. Much of this is however no clearly explained on the web site (correct on main web page but not through upgrade account facility. Trying to get Santander to understand this has been difficult bit so far I have received over £100 go away money

  12. Mr D.M. Sargent says:

    I have found the 123 account excellent. I run two accounts. The first account I have had for some time. This account has earned around £1,800 gross. The second was opened more recently. All I did to open the second account was to arrange for a standing order to pass backward and forwards between an account in Lloyds and Santander. Add a couple of direct debits and you are in business. I set up a new club account in Lloyds paying 4% so taking advantage of the best interest rates you are likely to find these days

  13. You’d be much better off having a no fee bank account and use a cashback site such as quidco instead, where cashback amounts are typically higher anyway.

    Satans have tried to hard sell this account to me on a few occasions, even when I have a much better product, the zero account with them. When I mention potential misselling and contacting Ms Botin (which I have) they quickly back off!

    • I use the 123 account and Quidco (not to mention credit card cash back as well). Combining all these options is the best way to maximize your returns.

      The £2 monthly account fee on this 123 account is easily covered by all of the cash back from bills (which you can’t get via Quidco – I mean, you can often get cash back if you switch to a different supplier, but that’s a one time thing and you’d still get your 123 account cash back if you did this anyway).

      It’s also a plus that you only have to put in £500 a month to activate, which is about half the typical amount – I’m self employed so payments to my main account can be rather sporadic.

      As stated, not the best choice if you need the use of overdrafts, you always have to determine the best option for your circumstances (and definitely double check everything people from Santander say/promise) but I’ve not seen a better option for myself.

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