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Santander 123 Lite Account Review – Still Worth Using?

A few years ago, the Santander 123 account was the must-have account for everyone. But when the charges increased and the benefits reduced, many of us switched over to the 123 Lite account. But as we’re in 2021, take a look at this review to see if this still an account we all should have.

I’m a man with many bank accounts, mainly because they pay me cashback. And the first account that I had that paid me was the Santander 123 account, which was originally introduced back in 2012. And I don’t blame Santander for doing it either. The bank had a terrible reputation, with customers always giving it a bashing.

But the 123 was quite the game changer. Not only could you get 3% interest on balances of up to £20,000, you could also get 3% cashback just for paying your bills. There was a fee – of just £2 per month. For the majority of customers, they would be paid to have an account and get a decent interest rate too. There was nothing quite like it on the market.

santander 123 lite account
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In 2016, the fee went up to £5 per month (although it reduced again in 2021). Although quite a steep increase, the account was still worthwhile if you had a large sum to put in there. And if you didn’t… say hello to the 123 Lite. Although you didn’t receive interest, it came with all the main 123 benefits with just a £1 fee.

But over the last few years, interest rates have taken a hit across the banking sector and Santander has reduced theirs accordingly. But not only that, they reduced the cashback you can earn and doubled the fee for the Lite account.

The question is, is it still worth bothering with the Santander 123 account or the Lite alternative?

Any switch incentives?

You may be aware that lots of banks offer incentives of between £100 and £150 for switching your current account to them. These offers come an go and it can be a matter of luck if you happen to switch at the right time. However, Santander is one of the few banks that I have never seen offer one of these bonuses.

Santander 123 vs Santander 123 Lite

Santander 123Santander 123 Lite
Monthly fee£4£2
To qualify2 Direct Debits
Pay at least £500 into the account each month
2 Direct Debits
Pay at least £500 into the account each month
Log onto Online or Mobile Banking at least once
every 3 months
Need to knowN/AThis is a paper-free account
Overdraft fees39.94% APR39.94% APR
Interest0.30% on balances up to £20,0000%
Cashback 1%Council tax bills
Mobile and home phone bills, broadband and paid-for TV packages
Santander monthly mortgage payments
Council tax bills
Mobile and home phone bills, broadband and paid-for TV packages
Santander monthly mortgage payments
Cashback 2%Gas and electricity bills
Santander Home Insurance
Santander Life Insurance
Gas and electricity bills
Santander Home Insurance
Santander Life Insurance
Cashback 3%Water billsWater bills

How much can you make with cashback?

Let’s use the following figures to get a rough idea of how much cashback could be worth each month.

Monthly billCashback rateCashback amount
Council Tax£1401%£1.40
Gas and Electricity£802%£1.60
Broadband and Phone£501%£0.50
Total cashback:£5.60

If you have a Lite account, after fees, the the cashback will come to £3.60 per month or £43.20 per year.

It’s important to note that the cashback is capped to £5 per tier each month. That means that even the biggest of spenders can only receive a maximum of £15 per month. Although I would check for leaks if you’re receiving the full £5 cashback for water.

You can visit the Santander site to calculate your exact cashback rates.

Which is better – the full 123 account over the Lite?

There’s not really much of a contest here. The only real advantage to the full account is the fact that it pays interest on credit accounts. But even if you maxed out the account at £20,000, the interest you earn for the year will be £60. But you need to deduct the extra you pay in fees compared to the Lite, which comes to £24 for the full year.

If you do have £20,000, then there are far better places to put it than a 123 account.

Apart from that, the accounts are almost the same. I can’t see a reason why anyone would want to pay the extra for the full account.

Other benefits to banking with Santander

I have covered the benefits and downsides to the 123 account, but what about the benefits to banking with Santander in general? What other perks are there that are worth considering?

Retailer Offers

This is an extra way to earn cashback. Santander will add offers to your account and all you need to do is accept them. Rates generally range between 5%-20% and there are plenty on offer, including Morrisons, CO-OP, Just Eat, KFC and Costa. Once you have accepted an offer and spend, the cashback will be added to your account.

selection of retailer offers from santander

My Money Manager

This app feature allows you to keep a closer eye on your account. It will

  • let you know if your bills are higher than usual, or if you spent more on shopping than usual
  • check how much you spent and where you spent it
  • tell you when you’ve received a refund
  • get insights about money coming into your account

If you want to turn the Money Manager feature on, you need to click the icon in the top right corner of the Santander banking app.

It is quite handy, although not particularly groundbreaking. There are plenty of apps that already offer this, along with a lot of extra features and better insights. You can see my review of the best budgeting and personal finance apps here. But you may decide to opt for the Santander option if you don’t fancy downloading extra apps.

Can you pay cheques in with the Santander app?

In short, no you can’t.

I’m a man with many banking apps, and the majority allow you to pay in cheques remotely, just by taking a photo of the front and back. So I checked my Santander app to see where the feature was. Unfortunately, it was nowhere to be seen.

So it was off to google to see if I could find anything more. A quick search came up with the term ‘santander pay in cheque app uk’ and right at the top, there were instructions how to do it. On closer inspection, it turned out that this was just for customers who belong to Santander in America.

Whether they will ever introduce this feature, I can’t guess. Cheques are becoming more unpopular and the longer they leave it, the less point there is for it actually to be added.

Is the Santander 123 Lite account still worth it?

It’s true that the account is nowhere near as good as it once was, but I still wouldn’t dismiss it completely. It’s an easy way to make money with little effort. But, if the household bills don’t come out of your 123 account, then it becomes a fee-paying account without any benefits.

Check the cashback link I provided above to see if you will actually make money by opening this account.

Any decent alternatives?

There are a couple of alternatives to the 123 account that you may want to consider. The Barclays Blue Rewards account costs £4 per month, but will pay you £7 for having 2 Direct Debits. On top of this, you can earn extra if you have a mortgage, loan or insurance with Barclays. And, there are some cashback offers available too.

Or, you can take a look at the Club Lloyds account. This won’t earn you money, but you can choose a reward each year which includes cinema tickets, movie rentals or a magazine subscription. You can also earn interest on credit balances at a higher than Santander. The account comes with a monthly £3 fee, but that can be waived if you pay in £1,500.


When is cashback added to my account?

Cashback should be paid when you receive your statement the following month. For me, is the 6th.

When is money earned from retailer offers added to my account?

This will be paid at the end of the following month.

When is interest paid on the Santander 123 account?

If you have a credit balance, the interest is calculated daily and paid monthly.

The cashback from the Santander retailer offer hasn’t tracked, what do I do?

This does happen from time-to-time. You need to log into your online account (not through the app) and send a message to Santander. It takes a while, but they will look into it and should credit your account.

Can I change Santander 123 to a Lite online?

You can. You need to log in and follow the instructions. Alternatively, you can call Santander or visit one of their branches.

Does Santander 123 account include travel insurance?

No. It used to be on offer with 123 World accounts, but is no longer available.

What is the Santander 123 credit card?

This was a credit card that paid cashback on certain purchases. It was removed from the market several years ago.

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