Santander: Christmas card with your name on it?

In the three years I’ve spent as MoneySuperMarket’s money editor, credit card deals have continued to get better and better.


Time after time, we’ve seen one provider try to outdo the next in a bid to take top spot on our comparison tables. And we’re not complaining as all this fighting has resulted in some truly amazing offers that we just wouldn’t have thought possible a few years back.

But Santander’s new and improved 123 credit card fresh on the market this week, has blown us away by shooting clear into the lead for THREE different kinds of borrower! In other words, there’s a high chance it could be the deal for you. See what you think…

Borrower 1:

“I’ve run up credit card debt and I’m looking to transfer it to a cheap home…”

It’s mid-December – so totally forgivable if you have run up a chunk of spend on your plastic. Nevertheless, with average APRs (annual percentage rates) on credit cards hovering at almost 19%, you DON’T want to be paying interest on it.

The leaves you with two choices: either pay off your debt in one fell swoop, or transfer it to a 0% credit card deal. And unless you’ve got a fat Christmas bonus is coming your way, it’s likely to be the latter.

Santander’s 123 card is now offering almost TWO YEARS (23 months to be exact) interest-free on balances transferred from a different card provider – that’s 23 months when you won’t be charged a penny interest on your debt.

Even if you don’t need a credit card for borrowing, the Santander’s 123 card could still be worth a look ...

But the real bonus is that Santander won’t charge you a balance transfer fee – which is unprecedented for 0% terms this long.

For example, while Barclaycard and HSBC balance transfer cards both offer a longer 34 months interest-free, (Mark Hooson has more on these) they charge fees of 2.99% and 3.3% respectively.

So on a £3,000 debt transfer, that means forking out around £90. Just to repeat: switching that debt to Santander’s 123 will cost you nothing in terms of a fee, and nothing in terms of interest for 23 months.

The 23-month interest-free period of course means you’ll have 11 months less to clear your debt before interest kicks in. But if you get organised from the outset, and you’ve got the funds, you needn’t pay it.
Simply divide the debt you want to transfer by 23 (the number of interest-free months) and – if you can afford it – set up a monthly direct debt for that amount.

The rub on the Santander 123 card is that, while there is no balance transfer cost to pay, it does come with a £24 annual fee (which is already factored into the quoted 16.5% APR). That said, if you have a Santander123 current account, the first year’s fee is waived.

A new alternative

If you don’t need that much time to clear your card debt, head for Santander’s OTHER new card, which also landed this week.

The Santander Credit Card offers 15 months at 0% on both balance transfers and purchases – and comes with NO annual fee and NO balance transfer fee. This is followed by an APR of 18.9% (variable).

With nearest competitor, Tesco Bank, offering only 12 months’ 0% on each for no fees, Santander is – again – the clear winner.

Borrower 2:

“I want to spend interest-free…”

If you are planning a big purchase in the New Year and want to spread the cost, Santander’s 123 is also a cracker as it also won’t charge interest on purchases for the first 23 months.

(For purposes of context, the next best 0% purchase card is from Halifax and offers only the first 20 months interest-free.)

Again, though, there’s the £24 annual fee on the Santander deal to consider in return for your extra three months 0% purchase power.

In other words, if you want a card for 0% spending ALONE, Halifax could still be the better option.

If you plan to transfer a balance AND spend on the 123 card, you won’t be charged interest for 23 months on either part. But if you just make the minimum repayments each month (the greater of £5 or 2.5% of the balance), bear in mind it will be put towards your purchase balance first – not the debt you transferred.

Borrower 3:

“I want to earn cashback on what I spend…”

Even if you don’t need a credit card for borrowing, the Santander’s 123 card could still be worth a look as it pays cashback on your everyday spending – which is something of a pièce de résistance.
The cashback part of this card hasn’t changed with this new incarnation and is made up of these elements:

-1% cashback at all major supermarkets

-2% cashback at all major department stores

-3% cashback on petrol and national rail and Transport for London travel (up to a combined maximum of £9 a month).

But remember to factor in that £24 fee and pay off your balance in full every month to take maximum advantage.

Top tip!

It won’t surprise you that you’ll need a good credit score for either of these new credit cards. If you’re not sure you’ve got one and you apply only to be turned down, it won’t do your credit report any favours.  Using our Smart Search tool will give you an indication if you will be accepted or not without leaving a footprint on your credit file. Simply click on the button that says:  ‘Will I get this card?’

Please note: any rates or deals mentioned in this article were available at the time of writing. Click on a highlighted product and apply direct.

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