Santander will increase the monthly fee of its popular 123 current account to £5 in January.
The Spanish bank attracted more customers via the current account switching service than any of its rivals last year (according to BACS figures), partly due to the popularity of the account, which offers 3% AER on balances between £3,000 and £20,000.
The account also offers up to 3% cashback on household bills paid by direct debit.
However, a number of banks have improved the incentives on offer to new current account customers in recent weeks.
Here, we evaluate some of the best deals on offer for those looking to switch current account.
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How does the Santander 123 current account compare?
Santander 123 current account customers can earn £600 in annual interest before tax if their balance remains at £20,000 or above throughout the year.
They can earn 1% cashback on Santander mortgages, council tax and water bills, 2% cashback on gas and electricity bills and 3% cashback on TV and telecoms bills.
Customers need to credit their account with at least £500 per month and set up at least two direct debits to qualify for interest and cashback.
The monthly fee stands at £2 (£24 a year), rising to £5 (£60 a year) on 11 January, but in many cases customers will earn more than that in interest and cashback.
Santander has urged existing customers to check their statements to see if the account still provides good value.
Find out more: Best bank accounts for customers who are in credit – find a great deal
Best bank account incentives
You can get 5% AER (for the first year, 1% thereafter) on balances up to £2,500 with the Nationwide FlexDirect Account. TSB also offers 5% AER on balances of up to £2,000, as well as 5% cashback on your first £100 of contactless spending every month.
A number of banks have also recently increased the cash rewards offered to customers who switch to them.
Switch to First Direct through certain websites and you’ll now get £150 credited to your account, while switching to Halifax will net you a £125 cash reward, as well as a £5 monthly payment if you meet certain additional criteria.
Find out more: Making the most of multiple current accounts – maximise your interest with this advice
Switching current accounts
The current account switching service was launched in September 2013 to make switching bank accounts quicker and easier.
The service guarantees you’ll change your current account provider in seven working days and that switching all of your payments will be managed quickly and easily.
Santander has attracted more than 500,000 new customers via the current account switching service since it launched, which is roughly one in four of all customers using the service.
Find out more: How to switch bank accounts – a step-by-step guide