Santander has revealed plans to reduce the in-credit interest rate for its 123, Select and Private Current Accounts.

The reductions, from 1.50% to 1.00% on balances up to £20,000, are due to take effect from 5 May 2020, and will mean customers can continue to earn up to £199 in interest per year.

Santander also announced it will be capping household bill cashback at £5 in each of the three cashback categories on its 123 Current and Lite Accounts, as well as its Select and Private Current Accounts – meaning customers can benefit from up to £15 cashback per month, or £180 per year.

The bank indicated nine in ten customers will be unaffected by the cap.

Santander suggested it is making the changes as a result of several factors, including a persistently low interest rate environment and the financial impact of regulatory changes in the banking industry.

Santander head of retail banking, Susan Allen, commented: “While we have had to make some difficult decisions in the current environment, our current account range remains very competitive.

“Our 123 accounts provide a range of benefits that we know our customers value and our goal is to ensure these accounts remain sustainable for the future.”

Santander announced it will be writing to all customers from January 2020 to explain the changes, with details included in monthly statements and on the bank’s website.

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