From January, Santander will charge three million current account holders £60 a year, up from £24.
Staff will reportedly be told this week that current account fees will rise from £2 a month to £5 a month from January, with customers to get the news later in the week.
The change severely cuts the benefits of holding a Santander account for customers who switched their current account from the big four UK banks: Lloyds, Barclays, HSBC and RBS.
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Fees for the Santander credit card will also rise from £24 to £36 a year.
Santander said that it was responding to changes in ‘the financial landscape’ such as tough bank legislation and consistently low current account saving rates. A spokesman said that a number of competitors including Capital One and Tesco has also been scrapping perks.
The news comes ahead of a report by the Competition and Markets Authority next month exploring concerns that the big four banks do not offer good enough deals to consumers because of lack of competition.
The Santander 123 account, with its 3 per cent interest on balances between £3000 and £20,000, seemed to offer a viable alternative, but the new charges will largely negate those benefits.
Santander said that the three million current account customers held an average of £12,500 in the 123 account. "Most of our customers are using it for the interest rates and the average cash back will get is £9, which continues to be more than the fee," the spokesman said.
