Santander's 123 chop and how do we pay for the coronavirus crash?

This is Money Podcast

This is Money

Business News, Business, Investing, News

4.1 • 650 Ratings

🗓️ 11 May 2020

⏱️ 38 minutes

🔗️ Recording | iTunes | RSS

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Summary

The latest Santander 123 account rate cut, trying to turn a profit on mortgage holidays, how we pay for the coronavirus crisis and furlough scheme and the crash in car sales all feature on this week’s This is Money podcast.

Once upon a time, Santander’s 123 could lay claim to being the king of the current accounts.

As banks battled to customers to switch, Santander’s cashback and 3% interest-packing deal was one of the main challengers for the crown.

The shine came off slightly when that interest rate was chopped to 1.5% in 2016, but now the 123 account has been doubly dented with a rate cut to 0.6% announced on the very same day the rate was already being cut to 1%.

In all but name it’s now the Santander 1, 2, 0.6 account and that doesn’t quite have the same attraction.

But when letters are coming through the post telling you that your savings account has been chopped to 0.01%, perhaps it is still worth bagging a current account paying 0.6%.

On this week’s podcast, Simon Lambert and Georgie Frost look at why Santander has chopped again, if the deal is still worth taking regardless, and whether the great current account switching push has fizzled out.

Next up on the podcast is mortgage holidays. Figures show almost 2 million people have taken up the option of a break from their mortgage payments, but some who don’t need to take one have been wondering if it might be a financially savvy move to do so anyway.

Could you save or invest the skipped payments and make money in the long run? And even if that is possible, is it ethical?

Plus with 6.3 million people furloughed, can we really expect the mortgage holidays to end in June – and how does the nation pay for the colossal coronavirus rescue package?

And finally, Britain’s best-selling car in April was Tesla’s Model 3 but astonishingly it wasn’t the most sold vehicle. That accolade went to a van, the Mercedes Sprinter, but will the motor industry be changed by all this?

Transcript

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0:00.0	Welcome to This Is Money. I'm Georgie Frost and alongside me today is editor Simon Lambert. And coming up,
0:06.2	another blow for Santander customers. We look at whether a mortgage holiday is a good idea even if you
0:11.3	don't need one. And Britain's bestselling motor in April was, wait for it, a van. Don't forget
0:17.3	you to stay up to date with all the latest breaking money news. Just go to this ismoney.com. UK or download the app but first. Yep, the blows keep coming for Santander 1, 2, 3 customers.
0:28.0	They faced a double whammy of bad news this week. On the very same day that one cut to their interest rate came in,
0:34.8	they were told to expect another in August, meaning in the space of
0:38.9	just three months, customers holding the full balance will have gone from earning up to
0:43.9	$302 a year to just £120 in interest.
0:48.7	So you'd expect, of course, naturally Santander would cut the £5 a month charge for the privilege of holding this account
0:56.0	by an equal percentage.
0:58.0	No, of course they didn't.
1:00.0	That stays exactly the same.
1:01.0	But it's not just Santander customers.
1:03.0	This has been a miserable month for savings with current accounts paying them decent interest rate return with cuts from Nationwide and TSP as well. So Simon, do-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-l-I remember Santander back in the day, talking about it on podcast past, the darling of current accounts at one stage. But since it's been the darling, it has not been the darling so much more because the cuts keep
1:28.6	coming. Is it time? They just scrap the whole thing because last time I'm sure when the last
1:34.7	cuts were announced, we decided if this would signal the end of these sorts of accounts
1:39.2	altogether. Just explain briefly what they do. Yes, we asked in our previous podcast when we talked about this,
1:47.3	whether this was the end of current accounts with benefits.
1:50.8	And it turned out not to be, but this might be.
1:54.2	So the Santando 1-2-3 account, very, very popular.
1:57.8	When it was launched, it was at the sort of peak of the current account switching
2:02.5	battle. There was a huge amount of pressure on the banks to get people to switch current accounts
	...

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