Santander slashes benefits on top accounts and hikes overdraft fees to 39.9%
Santander has slashed benefits on its top accounts and hiked overdraft interest fees to 39.9%.
The increase works out at about 9p a day per £100 borrowed and will be effective from April 6.
The bank also said it was cutting in-credit interest on its 1I2I3, Select and Private Current Accounts, from 1.5% to 1% and limiting how much cashback you can get from paying bills to £5 in each of the three cashback categories.
Head of retail banking Susan Allen said: “While we have had to make some difficult decisions in the current environment, our current account range remains very competitive.
"Our flagship 1I2I3 Current Account continues to offer great value, with customers able to earn up to £379 per year in interest and cashback for an account fee equivalent to just £60 a year, while 1I2I3 Lite customers can earn up to £180 a year in cashback for a fee of just £12 a year.
“Our 1I2I3 accounts provide a range of benefits that we know our customers value and our goal is to ensure these accounts remain sustainable for the future.”
It comes as city regulatory the Financial Conduct Authority moves to ban banks from charging people by the day for their overdrafts, as well as extra for going into unarranged overdrafts.
And despite the high APR, overall, customers who are regularly overdrawn could save money.
Allen said: “The new single interest rate, combined with the removal of all other overdraft charges from our personal current accounts, provides clear and simple overdraft pricing for our customers, with the vast majority of customers paying less and a daily fee of just 9p per £100 borrowed."
Santander also said it has support in place for people struggling, and that only one person in seven would pay more as a result.
“We know that helping people manage their day-to-day finances effectively goes beyond simplifying overdraft pricing," Allen said.
"We have a range of support services in place – from our over-the-phone experts to our in-branch workshops – and would encourage any customer who would like help in understanding the impact of these changes, or any other aspect of managing their money, to get in touch.”
Santander said it would contact all customers at least two months ahead of the changes as well as provide options for customers who look like they will be worse off as a result.
The changes to the benefits paid out by customers of Santander's 1I2I3, Select and Private Current Accounts were also linked to changes in the rules, as well as the ongoing low-interest rates environment.
That means, from 5 May 2020, in-credit interest rates will be cut to 1% on balances up to £20,000.
Household bill cashback will also be capped at £5 in each of the three cashback categories on its 1I2I3 Current Account, 1I2I3 Lite, Select and Private Current Accounts.
That means you will only be able to earn £15 cashback a month or £180 a year – although the bank added nine customers in ten won't be affected by the cap.
But while cutting cashback and interest, Santander kept account fees unchanged at £5 a month for 1I2I3 account and £1 a month for 1I2I3 Lite Current Account.
Santander is also writing to customers of these accounts, to explain the changes, while details will be included in monthly statements and on Santander’s website.
You can see how much cashback and interest you're currently earning by logging in to online or mobile banking or on your monthly account.
Santander said it would provide information on alternative account options for customers who will now end up paying more in fees than they get in cashback or interest.
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