April Savings Round Up
Each month, James writes a column for Around Town Magazine, which goes out to 60,000 homes and businesses in Essex. His April column is reproduced here:
It’s been a busy few weeks in the savings market and at Savings Guru HQ with a host of rate changes, two new banks entering the market and an awards evening!
New easy access table toppers
As we predicted, Family Building Society withdrew their table topping premium saver account, paying 1.51%. In fairness, it lasted a little longer than we expected. Fortunately, no sooner had it ended, Kent Reliance were launching a 1.50% easy access account joining Marcus and Virgin Money at the top of our best buy tables.
While all our best buys are online only account opening, Kent Reliance has launched a 1.40% easy access account that is available through its branch network in the South East and by post.
RCI Bank secures UK Banking licence
A mainstay of our easy access tables over the past few years has been RCI Bank, owned by French car manufacturer Renault. It has Brexit proofed its business by obtaining a UK banking licence and coming under the protection of the UK’s Financial Services Compensation Scheme, rather than the French equivalent which its savers deposits were previously covered under.
Two new banks enter the UK savings market
Banks were like buses in the last month. Having only seen the launch of Marcus since 2017, Arbuthnot Direct and Smart Save Bank, owned by Chetwood Financial, joined the market. Arbuthnot launched with competitively priced 3 Year (2.40%) and 5 Year (2.50%) Fixed Rate Bonds.
Smart Save Bank launched with a 1 Year Fixed Rate Bond paying 2%, the best outside of the Islamic Banks dominating the top of our one year tables. Unsurprisingly, that rate lasted less than two weeks before being withdrawn. The online application process was impressively simple and easy though, so we look forward to seeing future product launches.
Zopa Bank to be next?
We don’t expect this flurry of new launches to end anytime soon. Peer to peer lender Zopa obtained a banking licence at the end of 2018 and is in a testing period known as mobilisation. We expect to see Zopa launch fully in the summer and, given the impact it has had on the peer to peer lending market, with over £3bn lent, we anticipate big things.
Monzo partners with OakNorth for savings accounts
Fintech darling Monzo has partnered with OakNorth to enable the later to provide savings accounts to its 1.6 million current account customers. Monzo had previously launched savings accounts with Investec in November 2019 but these were closed to new customers in February this year.
The tie up with OakNorth sees four savings accounts launched:
- Instant savings - 1%
- 6 Month Fixed Rate Bond -1.36%
- 9 Month Fixed Rate Bond - 1.46%
- 1 Year Fixed Rate Bond - 1.53%
There’s also two ISAs – an Instant Savings Cash ISA 1.14% and a 1 Year Fixed Rate Bond ISA 1.38%.
The accounts can all be opened and managed via Monzo’s mobile app and come with a £500 minimum opening balance, so are accessible and very easy to use for their customers. However, the convenience comes at a price with OakNorth offering around 0.35% better rates for the same products direct. Monzo customers will also be able to find other providers paying around 0.50% more.
This is definitely a step forward for Monzo customers, but we expect that there will be other savings partnerships for their current account holders going forward and their prospective savers will probably be hoping that the rates on offer get closer to the market leaders.
Government savings schemes flop
With Brexit dominating the political agenda, one piece of news slipped out from the Office of Budget Responsibility almost uncovered. The budget watchdog announced that the £845m the government expected to be used to top up payments for Lifetime ISA (LISA) savers by 2021 has been halved from £845m to £420m.
Similarly, just over 90,000 savers have joined the Help to Save scheme, where the government gives 50p extra for every £1 lower income earners save. This is substantially under the 195,000 forecast.
Both schemes have been launched with good intentions but have been poorly executed. LISAs are far too complex and confused with the dual but fundamentally completely different savings objectives of house purchase and retirement. Help to Save is a noble idea but incentives aren’t the reason why the poorest fail to save, lack of money to spare is.
British Bank Awards
Savings Guru finished runner up in the Consultancy of the Year category of the British Bank Awards, beating global heavyweights including Deloitte, Capco and CapGemini. Congratulations to winners 11:FS and thank you to every one of you who took the time to vote for us.
That’s all for this month. If you don’t want to wait for next month’s update, then you can subscribe to our newsletter by submitting your email address on our website!