New NatWest and RBS Reward Bank Account beats Santander 123

You can earn even more cashback with the Reward Bank Account from NatWest and Royal Bank of Scotland.

NatWest and Royal Bank of Scotland (RBS) have launched a new current account, allowing you to earn 3% cashback on seven different household bills paid by direct debit.

The launch is fantastic news for customers with a Santander 123 account who may be looking for a new bank account following the news of Santander’s drastic monthly fee increase from January.

Let’s take a closer look at how the new Reward account works, and how much cashback you can make each year.

Reward account: earn 3% cashback on your household bills

The Reward account launched on 12^th October and pays a flat rate of cashback on seven major household bills.

They are:

• Council Tax;
• Gas;
• Electricity;
• Water;
• Phones;
• TV;
• Broadband.

The cashback isn’t capped at all. Once you've earned the equivalent of £5 or more in rewards you can choose to bank it, trade up for vouchers from the likes of Cineworld and Currys PC World, or donate the cash to a participating charity.

The Reward account costs £3 a month, so you’ll need to be paying out £100 in eligible direct debits each month to cover that fee. If you already have a packaged current account with NatWest or RBS, you can enjoy the cashback offer too by paying an extra £2 a month on top of your existing packaged account fee.

How much cashback could I earn?

To put the NatWest Reward account to the test, I decided to see how much cashback I would earn each year based on my own household bills.

Let’s take a look.

As you can see, once the £3 monthly fee is taken into account, I’ll be walking away with £74.52 cashback a year. Not bad, given I’ll be paying those bills anyway!

You can see how much cashback you’d earn with the calculator on the NatWest website.

What would I get with Santander 123?

The Santander 123 account works slightly differently, in that there are different rates of cashback depending on what the bill is.

So you get 1% cashback on water bills, Council Tax bills and the first £1,000 you pay towards your Santander monthly mortgage repayment, if you have one. Then there’s 2% on gas and electricity bills, while you get 3% on mobile bills, home phone bills, broadband and TV packages.

Currently there’s a £2 monthly fee, but from January that is jumping to £5 a month.

Here’s what my bills would make me in cashback with the Santander 123 account.

So after the current monthly fee is taken into account, I’d make £41.64 in cashback. But from January that figure would plummet to a frankly pathetic £5.64.

When Santander wins

However, Santander’s 123 account does have another significant plus point, and that’s the rate of interest it pays on your balance. You earn 1% on balances from £1,000 to £1,999, 2% on balances from £2,000 to £2,999 and 3% on balances from £3,000 all the way up to £20,000.

[SPOTLIGHT]That’s a fantastic return, far more than most savings accounts.

And don’t forget the cashback on mortgage repayments. I don’t have a mortgage with Santander, but if I did, I would pocket an extra £9.70 a month. Even after the massive increase in the monthly fee, I’d still be better off with the Santander account.

So if you have a Santander mortgage or a massive current account balance, the choice is a little tougher. For everyone else, the NatWest Reward Account is well worth a closer look.

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