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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 2023, take a look at this review to see if this still an account we all should have.

santander 123 lite account


Please note that the 123 accounts are no longer available to open. Take a look at its replacement – Santander Edge.

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

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

In 2016, the fee went up to £5 per month (although it was 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 many banks offer incentives of between £100 and £150 for switching your current account to them. These offers come and go and it can be a matter of luck if you switch at the right time. However, Santander is one of the few banks 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
Interest0.75% 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
TV£601%£0.60
Mobile£301%£0.30
Water£403%£1.20
Total cashback:£5.60


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

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

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 much of a contest here. The only real advantage to the full account is that it pays interest on credit accounts. But even if you max out the account at £20,000, the interest you earn for the year will be £150. 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 have £20,000, 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 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 of the 123 account, but what about the benefits of banking with Santander in general? What other perks are there that are worth considering?

Santander Boosts

This is a way to earn cashback when shopping and replaces an older scheme called Retailer Offers. You’ll need to create a separate account and link it to your debit or credit card.

In your Santander Boosts account, there will be offers for various shops offering cashback in the region of 1 – 10%. Simply click on the link and make a purchase, and you’ll receive cashback on your debit or credit card.

It works in a very similar way to other cashback sites.

Santander Boosts



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. Plenty of apps 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 opt for the Santander option if you don’t fancy downloading extra apps.

Can you pay cheques in with the Santander app?

Yes, you can. I’m not sure when this was introduced (I’m sorry, I missed it) but thanks to David for pointing it out.

Click on your account in the app and select the three dots in the top right. Then choose the deposit cheque option.

But don’t forget the Post Office

Although it’s a shame that you can’t pay in cheques via the app, Santander has a major benefit to help deal with this. You can manage your bank account through your local Post Office. This includes paying in and withdrawing cash, plus also paying in cheques. When many banks are closing branches, this could prove very useful.

Is the Santander 123 Lite account still worth it?

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, it becomes a fee-paying account without any benefits.


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 £5 per month, but you can earn money back by having direct debits set up and various other products.

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, including 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.


FAQs

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.

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.

David Mcternan

Tuesday 4th of April 2023

Just a quick one. You can pay in cheques via the app now with Santander 123 lite.

Money Saver Pete

Tuesday 4th of April 2023

Thanks David