Warning to customers with 1 major UK bank as it hikes fees on popular account
Customers who have accounts with one of the UK's major banks have been warned over a hike in fees. Savers will face an extra monthly cost for storing funds.
Savers in the UK have been warned about one popular account that will see fees increasing. There are many different types of savings accounts available to British customers, including standard instant-access accounts as well as Cash ISAs and fixed-rate accounts. One popular account, offered by one of the high street's major banks, will see its fees increase, adding an extra monthly cost for savers storing their cash.
The monthly fee for holding a Santander 1|2|3 account is set to go from £4 to £5 from May 2026. This will make the annual cost of holding the account £60. This savings account is extremely popular with British savers, but new customers are no longer able to open one. However, existing customers keep the account open as it offers them cashback on their household bills. Customers usually get 3% back on water bills and 1% on council tax and energy bills. This usually covers the annual cost of keeping the account open.
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Additionally, savers with this account get 1.5% AER on balances up to £20,000. The increase in the monthly fee takes effect on May 11, 2026.
While this might spur some savers to consider switching to a different savings account, one expert said that people will likely still reap the benefits of holding this account.
Andrew Hagger from MoneyComms told The Sun that it could still be worthwhile for those who have the account. He revealed: "Even though the fee is increasing by £1 per month, this should still be covered by the cashback on bills for most people."
However, it might be worth switching for some savers. Andrew explained that some customers might benefit from switching to a non-fee current account and keeping their savings in an instant-access account with a higher interest rate.
"A good example of this is Spring Savings from Paragon Bank which still pays a best buy 4.11%," he said. Santander isn't the only bank to increase its fees recently.
Club M, a popular account offered by Virgin Money, will see a rise from £12.50 to £14 a month from February 1, 2026. This translates to an extra £18 per year.
