Several app-based savings providers raised their easy-access rates following the Bank of England’s decision to raise the base rate to 3.5 percent yesterday.
App-based savings providers Zopa and Chip bank raised rates immediately, while JP Morgan-backed digital bank Chase announced it would do so from January 4.
Zopa now pays 2.86 percent interest, while Chase will raise its interest rate to 2.7 percent next month.
– Check the best savings rates easily accessible at our independent tables
Good news: Average savings rates have skyrocketed since the base rate began rising late last year.
Chip now pays a 3 percent account ‘bonus’, which is slightly different to an interest rate in that it can only be accessed when the account is closed, meaning the money doesn’t benefit from compounding . While the money credited to the account is protected by FSCS, the bonus money is not.
Yesterday the Bank of England raised the base rate to 3.5% from 3% in its latest attempt to rein in runaway inflation.
Members of the Monetary Policy Committee voted 6-3 to raise interest rates by 0.5 percentage point, bringing the base rate to its highest level since October 2008.
Although fixed-rate savings have receded in recent weeks, easy-to-access rates are expected to improve as a result of the latest central bank hike.
A Savings Guru spokesperson said: “We expect long-term fixed rates to pull back particularly, but overall we expect fixed rates to peak in 2022.”
“On easy access rates, it’s a different matter and we expect best buys to hit 3 percent by the end of this year and top 3.5 percent through 2023.
‘There is a possibility that we will even get 4 per cent. This will be very likely if the base rate rises to 4.5 percent or more.’
Zopa, Chip and Chase: What you need to know
Zopa Bank now pays 2.86% on its easy access offer, making it the third most generous offer on the market according to our savings rate leaderboards.
Savings boost: Zopa’s base interest rate is 2.86%, but savers can increase their rate up to 3.26% by locking up their cash for longer
Savers can also increase their rate up to 3.26 percent. locking up money for longer through a selection of linked reporting accounts.
It is a fully licensed and regulated bank and offers savers FSCS protection of up to £85,000 per person.
Zopa also offers one of the best app-based banking experiences. This is Money recently put seven savings apps to the test and Zopa came out on top.
It also has 7,428 reviews on the Applex app store, with an average rating of 4.8 out of 5.
The registration process only takes a few minutes, and from then on, logging into the app requires a fingerprint scan or a six-digit passcode.
It takes up to two hours to transfer money in and out of Zopa, but most transfers take around 20 minutes.
Savings and investing app Chip outperformed Zopa by increasing its easy-to-access offer from 2.9% to 3%.
The Chip account pays a bonus instead of traditional interest. The bonus is what Chip promises to pay when someone withdraws all the cash he has deposited in his account.
Essentially, the bonus is visible but not accessible until all the money is withdrawn from the account.
ClearBank retains all money deposited in the Chip deal and is eligible for the Financial Services Compensation Plan up to £85,000 per person.
But bonus money is not covered by the FSCS in the same way as any deposited money, which is a potential drawback for someone considering opening an account.
This also means that there is no compounding. In other words, savers will not earn interest on the bonus ‘interest’ they earn like with other savings accounts.
The Chip account pays a bonus instead of traditional interest. Bonus money is not covered by the FSCS in the same way that any deposited money is
If the bonus rate stays the same, someone with £10,000 in this account could expect to earn £300 over the next 12 months.
Chip’s deal is now the same as Yorkshire Building Society’s, which also pays 3 per cent, though only on balances up to £5,000.
The minimum deposit in the Chip account is £1 and the maximum amount is £250,000.
Chip works by connecting to each of its customers’ bank accounts through Open Banking and automatically reserving money for them.
Alternatively, savers can also choose to set up a recurring payment, much like a direct debit that can be taken weekly, bi-weekly, or monthly.
App-based bank Chase, part of US giant JP Morgan, announced it will raise the rate on its linked savings agreement to 2.7% from 2.1%.
Chase launched in Britain last September and has attracted more than 1 million customers since then.
Savers must have a Chase checking account to save with it. However, this is free and easy to do for those who are comfortable using apps to manage their finances.
It has a full UK banking license and comes with FSCS protection of up to £85,000 per person.
Chase UK has 36,000 reviews on the Google Play app store with an average rating of 4.1 out of 5.
The app also offers a regular automatic save feature that allows customers to round up their spare change to the nearest sterling with a 5 per cent interest rate increase. This will only work when you use the Chase card.
The app itself is fairly simple, though it’s worth noting that you’ll need a relatively new smartphone to run the account.
Your smartphone will need to be running iOS 14 and above, or have access to Google Play on Android 8.1 and above, which means some devices are not supported due to hardware limitations.
Chase UK has 36,000 reviews on the Google Play app store with an average rating of 4.1 out of 5. It also has a rating of 4.9 out of 5 on the Apple app store.
What other app-based savings providers stand out?
Atom launched in April 2016. It offers highly competitive fixed and easily accessible savings accounts and secured business loans for small and medium-sized businesses, as well as mortgages.
Atom is a mobile only bank, based in the North East of England and a team of over 400 people.
All savings held with Atom are protected up to £85,000 per person by the Financial Services Compensation Scheme.
We spoke to the head of Atom Bank about his plans for the future and what he thinks makes Atom stand out from its competitors.
easy access rate: 2.55 percent.
App Store Rating: 4.8 out of 5
Atom Bank has 32,000 reviews in the Apple App Store with an average score of 4.8 out of 5
Tandem launched in 2014 as one of the UK’s original digital challenger banks providing customers with products across their range or savings, green home improvement loans and mortgages.
It acquired Harrods Bank in 2018 and Allium Lending Group in 2020, a company focused on the home improvement lending sector.
Tandem has offices in London, Blackpool, Cardiff, Durham and Manchester and employs over 500 people.
Savings held with Tandem are protected up to £85,000 per person by the Financial Services Compensation Scheme, the UK’s deposit guarantee scheme.
Easy access rate: 2.55 percent
App Store Ranking: 4.3 out of 5.
Tandem Bank has almost 4,600 reviews on the app store with an average score of 4.3 out of 5
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