Breaking News for Santander Customers: Brace yourselves, because a fee hike is coming for some of Santander's most popular accounts! This move has many customers wondering if it's time to seek alternatives.
Starting May 11, 2026, holders of the 1|2|3, Select, and Private accounts will see their monthly fees increase by £1. This means you'll be paying a total of £60 annually just to keep your account active.
The 1|2|3 account, though closed to new applicants, remains a favorite for its cashback rewards on household bills. You could earn cashback on everyday expenses like water bills (typically 3%), council tax (1%), and energy bills (1%). But here's where it gets controversial: Will the cashback still outweigh the increased cost?
It's also worth noting that the 1|2|3 account offers 2% AER on balances up to £20,000.
What are customers saying?
Customers are already voicing their concerns on forums. One user on the MoneySavingExpert forum suspects the bank is simply trying to increase profits. Another commenter believes Santander is pushing customers towards the Edge Up account.
What about other Santander accounts?
While the 1|2|3 account is closed to new joiners, the Select and Private accounts are still open to those who meet the criteria. However, these accounts come with their own set of conditions, including higher income requirements. The Select account offers exclusive support and global assistance, while the Private account provides bespoke banking services and tailored investment advice.
Overdraft Charges Increase:
And this is the part most people miss: Select and Private account holders will also face increased overdraft charges. The interest rate (APR) on overdrafts over £500 will rise from 27.06% to 28.33%.
Is the 1|2|3 Account Still Worth It?
Financial expert Andrew Hagger from MoneyComms suggests the account could still be a good deal, but it depends on your individual financial situation. Even with the fee increase, the cashback on bills might still cover the cost for many. Plus, the 2% interest on balances up to £20,000 could provide some profit each month. For instance, if you have a balance of £1,000, you'd earn £1.67 per month, and with £10,000, you'd get £16.67 per month.
However, Hagger also suggests exploring non-fee-paying current accounts and keeping savings in high-interest easy-access accounts.
Rachel Springall from Moneyfacts points out that the maximum monthly cashback is capped at £15. After the fee, the most you can gain is £10 a month. But not everyone will earn that much. For example, if you spend an average of £50 on TV and broadband, you'll earn only £1.50 in cashback. If your monthly energy bills are £150, you'll earn £3, and if you spend around £50 on water and £200 on council tax, you'll get £2.50. So, it might be time to ditch and switch.
Considerations Before You Switch
Switching banks is usually a simple process, often handled through the Current Account Switch Service (CASS). This service ensures a smooth transition, typically taking about seven working days.
Other Banks Increasing Fees
Santander isn't the only bank making changes. Virgin Money's Club M package bank account will increase from £12.50 to £14 a month from February 1, 2026, costing an extra £18 annually. This account includes insurance policies and interest on current account balances. It pays 1% AER on current accounts up to £1,000 and 2% on linked savers up to £25,000.
Final Thoughts
So, what do you think? Will you stick with Santander, or are you considering a switch? Share your thoughts and experiences in the comments below!**
