Santander has launched Santander Edge, a new current account to replace its popular 1|2|3 Lite product.
It gives you 1% cashback on everyday spends and offers a generous 4% AER interest rate on its linked savings account.
But don’t rush to make the switch just yet – for those perks, you have to pay a £3 monthly fee.
Given there are already similar cashback products on the market, like the free Chase current account, I wanted to look at whether it’s worth making the switch, especially for existing customers.
Bye bye 1|2|3 Lite, hello Edge
Santander’s popular 1|2|3 Lite current account has been withdrawn, with Santander Edge replacing it for new customers.
Existing customers aren’t affected; you’ll still pay the same fees and get the same benefits if you keep your 1|2|3 Lite current account active.
While both are fee-paying accounts, Santander Edge costs £1 more per month for upkeep.
You’ll have to make a minimum deposit of £500 a month and have at least two direct debits in place as well, which is the same requirement as 1|2|3 Lite.
Benefits of Santander Edge
On the face of it, the perks with the Edge look pretty good: you get 1% cashback on certain debit card spends and 1% cashback on household bills paid via direct debit.
Both of these are capped at £10 a month, which means you can make a maximum of £20 a month, or £240 a year.
You have the option of opening up a linked savings account as well.
This pays an interest rate of 4% AER on deposits of up to £4,000 (it includes a 0.5% AER bonus rate for the first 12 months).
If you deposit the maximum amount of money at the beginning of the year, Santander says you can get £13.10 a month in interest, adding up to £157.20 after 12 months for the first year.
Then on top of all that, you can get cashback through Santander Boosts, which gives you random offers like cashback with certain retailers, vouchers, offers and prize draws when you sign up (for free).
In theory then, you can make upwards of £397.20 a year for the first year – when you take away the monthly fee, that comes to £361.20 a year.
International and CHAPS payments are free as well.
What you can get cashback on
Unlike the 1|2|3 Lite, Santander Edge lets you earn cashback on your everyday spending as well as direct debits for bills, so there are more opportunities to earn.
The following expenditures are eligible for cashback.
1% cashback for using your debit card at:
- Service stations and UK petrol stations
- Automated fuel dispensers
- Suburban and local commuter passenger transport, including ferries
- Passenger rail journeys
- Bus journeys
- Electric vehicle charging points
- Supermarkets and grocery stores
- Convenience stores
- Food markets
- Specialty food stores
- Vending machines
1% cashback on direct debits for:
- Council tax
- Gas and electricity bills
- Water bills
- Mobile and home phone bills, broadband and paid-for TV packages
What’s the difference between 1|2|3 Lite and Santander Edge?
The 1|2|3 Lite account has a tiered cashback system for direct debits only.
It gives you 1% cashback on council tax, mobile and home phone bills, broadband and paid-for TV packages and Santander monthly mortgage payments; 2% cashback on gas and electricity bills, Santander Home Insurance premiums and Santander life protection premiums; and 3% cashback on water bills.
There’s a £5 a month cap on each tier, which means you can make a maximum of £15 a month in cashback, or £120 a year.
No interest is paid when you’re in credit, and there’s a £25 fee for international and CHAPS payments.
After paying the monthly fee of £2, you can make a maximum of £96 a year, which pales in comparison to Santander Edge.
Should you switch from 1|2|3 Lite to Santander Edge?
Yes – but only if you normally use a debit card instead of a credit card as this is where you’ll likely earn the most cashback.
For the direct debit cashback, you’re unlikely to earn the full amount possible – your monthly bill will need to be at least £1,000.
Plus, not every company is eligible for cashback. Shell Energy for example is no longer on the Santander cashback list.
You can check which companies are on the list and work out how much you’ll likely earn by using this calculator from Santander.
It’s also worth bearing in mind that having Santander mortgage or insurance products will no longer earn you extra cashback with Santander Edge.
Should you switch from another current account to Santander Edge?
As mentioned earlier, the Chase current account is free and gives you 1% cashback on everyday spends and has far fewer restrictions on what those spends are.
And while the 4% AER interest rate is pretty generous, there are lots of savings accounts offering better interest rates.