The new kids on the block taking the savings market by storm.
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There is now a new way to save your money. A way to improve the returns you are getting from the traditional high street banks and yet still keep your money protected by the Financial Services Compensation Scheme (FSCS). With a simple approach, the new kids on the block are taking the savings market by storm. Are you ready to join the savings revolution?
With jitters in the stock market and property growth losing pace, cash is suddenly looking far more attractive, even with interest rates at historically low levels. For the first time since 2012, cash returns could outpace property price rises, especially with best buy savings rates rising every month.
There is a huge £1.2 trillion held in cash savings, so it’s little surprise that providers are looking at different ways to get a piece of the action.
Welcome to the savings revolution
The latest innovation comes in the form of the new Cash Savings Platforms. Think of them like a savings supermarket, where you can pick and choose the accounts you want to open, from those available. You manage your accounts with one simple login and without the need to fill in reams of paperwork every time you want to switch to the next best deal.
With the majority of us failing to switch savings account when our current deal becomes uncompetitive, a platform could be an ideal way of taking the hassle out of the process and could be just the thing that beats inertia and helps us to earn more meaningful amounts of interest on our hard-earned cash.
For too many years now, the big banks have relied on our inertia and so pay some of the lowest rates on the market – especially on older, obsolete accounts that people have held for far too long. And with over 80 per cent of the savings market sitting in accessible easy access accounts, most of us could be switching that money today, to an account that pays a far better rate of interest.
This is where the platforms come in. There are a handful of Cash Savings Platform providers currently available, all slightly different in their approach – although the premise is always the same. And even Hargreaves Lansdown, a large well-known name in the investment world, has got in on the act, with others due to launch this year.
So how exactly do these Cash Savings Platforms work?
As we said, each platform provider has a range of savings products available for you to choose from, like a savings supermarket. Most offer only fixed rate bonds, but some providers offer easy access and notice accounts as well.
Once you’ve applied to your chosen platform, you can choose the accounts most suitable for you, but you don’t have to fill out any more application forms. If you have more than £85,000 – which is the Financial Services Compensation Scheme (FSCS) protection limit available with each savings provider – with a platform, you can easily spread your cash between a number of different savings providers, keeping each deposit within the FSCS limit.
That way you know your money is always protected (provided you don’t hold other savings elsewhere with the same provider or one that shares the same banking licence).
You’ll be contacted when your product/s are due to mature and given the chance to move that money to the best available rate, without the need to fill in another application. With a few clicks, you can simply move that money to ensure you’re always getting a good return.
Now, you may sacrifice the very best rates (but not always) and some interest may be eaten up by fees for those that charge them, but – in the main – if you’re sitting in an uncompetitive account, whether it’s with the high street banks or not, it is likely that you will vastly improve the interest you can earn.
Why is the Financial Services Compensation Scheme (FSCS) important?
The FSCS is a UK statutory fund that provides an insurance to savers if the worst happens and a provider goes bust.
The current limit is £85,000 per person, per banking licence – however with some providers sharing an FSCS licence, your money could, unwittingly, be under protected.
Nothing sharpened the mind more than the banking crisis in 2007/08, when queues of people were seen outside Northern Rock branches, desperate to withdraw their cash following news reports that the provider was in serious trouble. Many of those trying to access their cash had far more than the FSCS limit, which at the time was just £31,700.
Although no one actually lost any money with Northern Rock, it did highlight that keeping your money protected is just as important – if not more so – than getting the best rates on your savings.
These savings platforms may not be for everyone. If you are happy chasing the very best rates, completing multiple application forms and keeping a good handle on your savings, then you may be better off. BUT for the majority of us they could be the key to boosting the interest on our cash.
Ready to maximise your savings? To learn more about the providers offering Cash Savings Platforms, how each of the them work and to find out which one might be best for you, download the new FREE guide to Cash Savings Platforms now, from our friends at Savings Champion.
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