The unmatchable savings account hits the UK
Sophie Biber London 25/02/19
KCL FinTech, King's College London
As of 2019, the average interest rate on UK savings accounts was 0.75%. This means that for every £1000 that you save for a year without withdrawing, you will earn £7.5. If you want to hit some of the higher rates you often must agree to several frustrating caveats. The highest interest rate currently offered in the UK is by a branch of Bank of Cyprus UK who offer 1.41% for 12 months, after which the rate drops to 0.85%. Another higher rate is Nationwide where you can get 5% but this is only for the first £2,500 of your balance and is only fixed for a year and you must pay in to the account £1,000+ each month and the rate still drops to 1% after a year. Thus for the average UK saver, who doesn’t have large amounts of cash and a guarantee they won’t need to withdraw suddenly, a lot of these options don’t work well. Especially if at best they’re only earning around £5-£8 a year for every £1000 that is put away.
Goldman Sachs, the reputable investment bank, started working on a better option. In 2016, they launched a new savings account in the US under the name Marcus by Goldman Sachs. Within the first two years they’ve seen $20 billion in deposits. This year they announced their move to the UK with an unheard-of interest rate of 1.5%. Their only caveat is that this drops to 1.35% after the first year. Unlike competitors, an account with Marcus can be started online and with a deposit of only £1 that can be withdrawn whenever with complete ease. There is no outrageously large minimum amount that must be deposited and there is no time period restrictions in which you cannot touch the money. Their website is incredibly simple, essentially just explaining the terms of the account with a button to sign up, the option to view your balance and to withdraw an amount.
Sarah Coles, personal finance analyst at Hargreaves Lansdown said, “The newcomer challenger banks have offered a ray of hope for savers – competing for business with some of the best rates on the market. A new entrant to the market, with the clout of Goldman Sachs, should keep the rest of the challengers on their toes, which is excellent news for savers.”
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