Article Contibuted by Smart Money People
Smart Money People has conducted a survey of 80 Santander customers following the news that the monthly fee for the bank’s flagship 123 Current Account is set to increase by 150%. More than 3 million customers will be affected by the new charges in January 2016, which are being introduced due to “external market factors” according to a spokesperson for the bank.
The survey found that, despite the upcoming fee increase, 80% of respondents are happy with the benefits they get from their current account and won’t be switching. Despite the new fees is currently the third most popular current account among reviewers with a score of 4.56 out of 5.
According to figures released by the government in 2013 75% of people have never switched current accounts, but as many customers switched to Santander’s 123 current account in the last few years (the account launched in March 2012), they may prove more likely to switch again.
The survey also found that customers are willing to pay a monthly fee for their current accounts as long as it doesn’t outweigh the interest and benefits they receive. One respondent said they would be willing to pay an amount “equivalent to my monthly cashback, leaving my monthly interest untouched”. This was a sentiment echoed across the responses received, suggesting that consumers are starting to really do the maths when working out which current account is right for them.
Talking about the decision to start charging customers £5 a month for their 123 Current Accounts, Reze Attar-Zadeh, head of retail products at Santander, told the BBC that “external market factors mean we have had to make some changes to ensure the products continue to meet the needs of our customers, but also our shareholders”. A statement from the bank referred to the fact that savings rates have fallen and remained low, and that the cost of running a bank in the UK has increased due to changes to banking legislation and regulation.
It’s worth noting that only the monthly fee for the account is due to change: cashback rates will stay as they are, as will the interest on balances. Santander is confident that customers will “still be able to generate a good monthly benefit”.
For Santander customers who are thinking about switching bank accounts, First Direct’s 1st Account and Nationwide’s FlexAccount currently top the Smart Money People charts. The 123 Current Account is still a highly recommended option, however it’s worth working out whether or not the benefits outweigh the new monthly fee.