A shocking revelation for Santander customers: a fee hike is coming, and it's hitting one of their most popular accounts!
The 1|2|3 account, a favorite among savers, is about to get a little less appealing. From May 11, 2026, the monthly charge for this account will increase from £4 to £5, a £1 rise that might not seem like much, but it adds up to a £60 annual fee.
But here's where it gets controversial: this account is known for its legendary cashback on household bills. It offers 3% cashback on water and 1% on council tax and energy bills, often covering the monthly fee entirely. So, is this fee hike a deal-breaker, or is it still worth it?
The 1|2|3 account's unique perks:
- Cashback on everyday household expenses
- 2% AER interest on balances up to £20,000
Despite the fee increase, experts like Andrew Hagger from MoneyComms believe it could still be a good deal for many. "The cashback on bills should cover the fee for most people," he says. "And the interest on credit balances provides a nice monthly profit."
However, Hagger also suggests considering a switch to a fee-free current account and keeping savings in a high-interest, easy-access account. He highlights Paragon Bank's Spring Savings account, which offers a best-buy 4.11% interest rate.
Rachel Springall from Moneyfacts agrees that the cashback benefits are appealing but cautions that not everyone will earn the maximum £15 monthly cashback. "For those with lower household bills, the fee might not be fully covered by cashback," she explains.
And this is the part most people miss: packaged accounts like the 1|2|3 are only worth it if you use the benefits. If you're paying a monthly fee and not utilizing the perks, you're essentially throwing money away.
The 1|2|3 account hasn't seen a fee increase since January 2016, when the charge went from £2 to £5, and then reduced to £4 in 2021. So, is it time to say goodbye to this account and explore other options?
Other banks increasing fees:
- Virgin Money's Club M account will rise from £12.50 to £14 a month from February 1, 2026, an extra £18 annually.
Switching banks:
Switching accounts is straightforward through the Current Account Switch Service (CASS). It usually takes seven working days, and direct debits are transferred automatically. Before switching, choose your switch date and ensure old bank statements are transferred to your new account.
Consider the perks: When choosing a new bank, look for benefits like 0% overdrafts, better savings rates, or free travel/mobile phone insurance.
So, is it time to ditch and switch? What do you think? Share your thoughts in the comments!
