Santander launches new Edge Up account to replace 123 account

Santander has today announced it has withdrawn 123 current accounts from sale.

Upon launch in 2012, the 123 account became one of the most popular current accounts, having for years paid 3 per cent interest rate on balances up to £20,000 and a variety of cashback on bills. 

Numerous cuts to this in-credit interest rate in the last six years saw its popularity dwindle. 

Alongside the 123 account, the Select and Private current accounts are also being removed from sale today.

Edge up: Santander’s new current account offers up to £30 a month in cashback on selected monthly bills and essential spending as well as a 3.5% interest rate on balances up to £25k

Anyone who already has a 123, Select, or Private current account with Santander can choose if they’d like to retain their existing account or transfer elsewhere.

Anybody choosing to transfer to a new Santander account will keep all their existing details including account number and sort code.

In its place, Santander is launching the Edge Up account, which it says offers customers the ability to earn over £100 a month in total with up to £30 in cashback and up to £71.72 in interest.

The Edge Up account is essentially a souped-up version of Santander’s Edge account, which was launched in November last year.

Most notably, new customers will be able to earn 3.5 per cent interest on balances up to £25,000.

This means someone maintaining the maximum balance will earn £875 in interest over the course of one year – before factoring in its £5 a month fee (see below).

The new account also offers 1 per cent cashback capped at £15 per month on supermarket and transport-based debit card spending.

It offers another 1 per cent cashback, capped at £15 per month, for household bills. 

This includes council tax, energy, mobile, landline, broadband and paid-for TV packages. 

Unlike a number of the big high street banks, its debit card will be fee free when being used aboard including no Santander charges when using ATM’s overseas. 

Although it may be that the local ATM will charge a fee as This is Money’s Simon Lambert found out recently when visting France.

Andrea Melville, director for personal current accounts and savings at Santander said: ‘We know many people are experiencing financial pressures at the moment with the increased cost of the weekly food shop, high energy costs, and other bills going up. 

‘Our new Edge Up Current Account is all about making it easier for our customers to make the most of their everyday spending and help them make their finances stretch a little bit further.

‘We have a strong history of providing our customers with innovative accounts and we are pleased to be able to continue this with our new Edge Up Current Account.’

Rising rates: The new Santander account comes at a time where many banks are also offering generous savings rates linked to their current accounts – and switching incentives

So should you sign-up to the new Edge Up? 

For all its benefits, there are some hoops and charges for any would-be customers to be aware of.

First and foremost it comes with a £5 monthly charge, which will add up to £60 each year.

Customers must also pay in a minimum of £1,500 a month and set up two direct debits from the account.

While the cashback sounds generous, in reality the majority of customers won’t get anywhere near the potential £30 a month.

To receive £30 monthly cashback they would need to spend at least £1,500 a month on eligible essential debit card spend and at least £1,500 a month on eligible monthly bills paid by direct debit.

It’s also questionable whether it’s worth keeping £25,000 in the account to maximise the interest it’s possible to earn given that there are better savings rates elsewhere.

The best easy-access savings rate currently pays 4 per cent, courtesy of Coventry Building Society.

Someone stashing £25,000 in that account could expect to earn £1,000 in interest over the course of one year.

Someone prepare to lose access to their cash for one year can now earn up to 5.7 per cent in a one-year fixed rate deal. 

A total £25,000 saved in the best buy one-year fixed rate deal will earn £1,425 over one year. 

This post first appeared on Dailymail.co.uk