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Is new Santander current account really as easy as 1-2-3?

Santander has launched its new ‘123’ current account with a unique proposition for weary bill payers.

In exchange for a small monthly fee, it promises to pay you money back on your direct debits (how much? see below) – plus a decent rate of interest on your bank balance.

Their publicity shows they clearly think this is a brilliant idea. And to be fair, it’s certainly something new.

But is getting money for nothing really as easy as the name suggests?

Let’s take a walk through from a fairly average bill payer’s point of view…

Santander 123 charges, interest and cashback


The first thing to include in the reckoning: this bank account costs you money before you earn any money back. Santander charges a £2 monthly fee.

But in exchange for that, it promises to reward everyday Joes and Janes who pay their bills by direct debit, and those who are happy to let a balance build up.

Here’s what you get by way of rewards:

Cashback in a 1-2-3 format

  • 1% cashback on direct debits for water bills and council tax
  • 2% cashback on direct debits for gas and electricity
  • 3% cashback on direct debits for media and telecoms (home phone, broadband, mobile and paid TV)

Interest, also in a 1-2-3 format

  • 1% interest on your balance as long as it’s over £1,000
  • OR 2% interest on your balance, if it’s over £2,000
  • OR 3% interest on your balance, if it’s over £3,000 – up to a maximum of £20,000
  • (Balances under £1,000 will not earn any interest.)

Oh, one other thing – to make sure this is used as your real current account, not just a substitute savings account, Santander stipulates that you must credit account by £500 each month and have at least two direct debits.

OK so how does this work in real life?

How much cashback will I actually get?


Let’s suppose you pay the following bills every month. Here’s what the above reward system equates to in cold, hard cash:

Bill you pay Cashback you get
£100/month Council Tax £1.00 cashback
£30/month Water & Sewage £0.30 cashback
£100/month Gas & Electricty £2.00 cashback
£35/month Mobile Phone £1.05 cashback
£50/month Media package (TV, home phone, broadband) £1.50 cashback
Total: £315 monthly bills £5.85 cashback

So do those averages look like you?

If your bills are higher, you might get more cashback of course. But do note that cashback only applies to bills you pay by direct debit.

Thumbs up or thumbs down?


What do we think? Well, let’s take a broad view. Current accounts are one of those services where people are notoriously reluctant to switch provider. So, we’ll applaud Santander for trying something new.

And if this gets people moving, it’ll cheer up the Independent Commission for banking, which said in a report last year that rates of customer mobility between banks is far too low for a competitive market.

However, it also said that people are too confused to switch when the pricing structure is complicated. So Santander’s new bank account one scores a thumbs down there. Unless you pay really large bills by Direct Debit, you pretty much need a spreadsheet to work out whether you’ll be better off for switching.

So what do you think?

You can compare bank accounts here, and you might want to take a closer look at the Halifax Reward Current Account, which pays you a flat £5 a month according to certain terms and conditions.

One thing we can say for sure is, if it gets enough people moving, other banks are going to have to do something – maybe something similar, maybe something different.


But if that happens, will it hasten the end of free banking in this country?

Comments welcome in the box below!

Compare Current Accounts

2 thoughts on “Is new Santander current account really as easy as 1-2-3?

  1. david King says:

    I have santander account which for first year paid interest at 5% but then moved to Halifax for £5 just be careful never to go overdrawn at all

  2. Christina Hine says:

    I have opened a Santander 1-2-3 account and am quids in every month. The branch works out all the comparisons for you, so you can work out in advance if it is the best account for you. Personally, I like getting extra money each month for conducting my account in exactly the same way I usually do.

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