LONDON (Reuters) - Santander's (>> Banco Santander, S.A.) British arm is to more than double the fees for its current account customers and also raise charges on its credit cards, blaming rising costs and low interest rates.

Santander UK's 123 products have attracted hundreds of thousands of customers from Britain's "big four" banks - Lloyds (>> Lloyds Banking Group PLC), Barclays (>> Barclays PLC), HSBC (>> HSBC Holdings plc) and Royal Bank of Scotland (>> Royal Bank of Scotland Group plc) - and attracted the highest number of "switchers" after rules were changed two years ago to make the process easier.

Santander said on Monday its 3.8 million 123 current account customers will be charged 5 pounds (nearly $8) a month from January, up from 2 pounds currently.

It is also increasing the fees on its main credit card to 36 pounds a year from 24 pounds, which it said was due to a change in European Union laws that will reduce the profits banks make from transactions. It has 1.9 million 123 credit card customers.

"Since launching the products, the financial landscape has changed significantly," Santander UK said on Monday. "Savings rates have fallen and remained low, and the ongoing costs of running a UK bank have increased as a result of changes to banking legislation and regulation."

Many Britons have been attracted by "cashback" offers to customers who pay for services from their 123 accounts or by using their 123 cards, and the bank said most of those payments will not change.

Santander this year hit its target of getting 4 million customers for its 123 products ahead of target, but warned competitive pressures were rising and could hurt its margins and growth.

(Reporting by Steve Slater; Editing by Ruth Pitchford)