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Savings platforms are arguably becoming the best place for savers, both in terms of managing their money and maximizing their returns.
These platforms allow savers to sign up in one place and manage accounts at different banks. It means they can exchange money between providers and get the best rates with less administration.
Moreover, not only are many platforms free to use, but some also offer cash giveaways to new entrants.
Savers signing up for the first time Hargreaves Lansdown’s platform, Active Savings,* can now earn up to £100 as a cash bonus.
Forget about piggy banks: Platforms allow savers to manage all their savings under one roof.
The amount of cashback savers will depend on how much they deposit. For example, whoever puts in £10,000 will get £20, while those who put in £80,000 will secure £100.
To take advantage of this, savers must open an account before November 30 and deposit at least £10,000 into one of the savings deals within 60 days.
Meanwhile, Raisin UK, another free savings platform, is currently offering a £30 welcome bonus to This is Money readers who open a new Raisin Account via this link* or a link that comes from our website.
It offers savers the chance to increase their savings by £30 when they open and fund an account in its marketplace with a minimum of £10,000.
What makes these signup offers even more compelling is the fact that both platforms currently offer a range of market-leading rates, even beating the market in some cases.
For example, Active Savings offers a fixed annual subscription of 4.6 percent.* That’s 0.1 percentage point more than the best available rates on the open market.
Hargreaves Lansdown’s platform will offer tiered cashback to new members until the end of next month
Someone who deposits £10,000 in the account will essentially get a return of 4.8 percent, including the cash bonus. That’s a return on investment of £480 after one year.
It also offers a two-year fixed payment 5 percent,* which is 0.2 percentage point higher than the market-leading deal on our best buy savings charts.
Someone who signs up and deposits £10k into this account would actually earn a return of 5.1 percent, including the bonus. That would equate to a return on investment of £1,045 after two years.
Raisin UK currently offers a 95 days notice of 2.52 percent.* Someone depositing £10k into this account for the first time through Raisin would effectively increase their rate to 2.82 percent.
That’s a return of £285 after one year with the option to add and withdraw money – albeit with 95 days’ notice.
This falls short of only one other deal on the open market. Family Building Society is currently paying 3 percent on an account with 90 days noticealthough it requires a minimum of £20,000 to open the account.
Going Online: While savings platforms don’t have every account on the market, they usually offer some of the best deals out there
Raisin also offers a three years* and five year deal* Pay 5 percent and 5.1 percent respectively, which is the market-leading rate in both categories, although savers also go directly to Gatehouse Bank taking advantage.
Savers can also take advantage of a range of shorter fixed deals that are not available when going directly to the provider.
For example, Aldermore Bank offers a: nine-month fixed-rate deal at 3.62 percent through the Hargreaves Lansdown platform.
Do people use savings platforms?
About 6 percent of people use an online savings platform, according to a recent study commissioned by Hargreaves Lansdown.
However, it could be much less. The Savings Guru estimates that cash on savings platforms currently represents less than 1 percent of the total market.
There is currently £5.3 billion in cash on Hargreaves Lansdown’s savings platform.
That may sound like a lot, but it’s negligible compared to the £267 billion tucked away in current accounts that earn no interest at all, and the £461 billion that goes off in easily accessible deals that pay less than 0.5 percent, according to the recent Paragon Bank analysis.
A spokesman for the Savings Guru said: ‘I think one of the reasons savings platforms are less well known is that the bigger ones don’t always compete for the same customers.
“If you have strong competition, it can lift the entire market. For example, take a look at price comparators. They competed heavily to promote themselves against each other and this lifted the whole market.
“Now most consumers go to comparison sites for their insurance quotes. We have not yet seen that in savings markets.’
Another reason, according to the Savings Guru spokesperson, is that platforms are currently reluctant to publish how much money they manage on behalf of savers.
He adds: ‘Savers will be much more comfortable using them if they knew some already had more than £5bn with them and hundreds of thousands of customers.
Hargreaves Lansdown Active Savings is the only one that publishes regular figures – but that’s only buried in their annual report, rather than celebrated.
“We think there is now between £15bn – £20bn on savings platforms in the UK – which is bigger than Metro Bank – but savers are unlikely to be aware of this.”
Controlled from your smartphone: Raisin’s online platform allows savers to have all their accounts under one roof, without having to juggle multiple logins
Right now, there’s a lot to like about both Raisin and Active Savings. Market leading rates and sign up offers should be a recipe to entice everyone.
However, savings platforms also simplify the process for savers by helping them keep track of their accounts more easily and move money faster.
They may not always offer the very best rates on the market, but they allow customers to manage multiple accounts in one place.
It means savers can open multiple savings accounts at many different banks through one online account, whenever and wherever they want, without the usual form-filling and paperwork.
Tom Higham of Hargreaves Lansdown, says: ‘Online savings platforms bring together a number of different banks, so in terms of Active Savings there are, for example, 14 partner banks – including internet-only banks such as Aldemore but also building societies such as Coventry Building Society.
The idea is that once you put your money on the platform, you can switch between banks very easily – without the usual hassle – and keep an eye on everything in one place
“The idea is that once you’ve put your money on the platform, you can switch between banks very easily – without the usual hassle of opening a bank account – and keep an eye on everything in one place.
“It also means it’s easier to keep separate piggy banks for a variety of reasons without losing sight of them — so you might have an emergency savings fund that’s easily accessible and what a year for a new kitchen.”
With rates evolving rapidly and the top of the top buying savings tables changing almost daily, savings platforms can make life easier for savers, Higham said.
He adds: “Customers can place different amounts in fixed installments of different lengths, and they can also be easily accessible, to give them more flexibility.
‘And when their fixed term ends, they can switch to a new interest rate at another bank with a few clicks.
‘People only have to create their account and they can choose from different rates.
“We also keep them up to date with the latest rates so they can save time searching.”
Divide and conquer: Platforms allow savers to add cash, move it between banking providers and withdraw online. All with one login
For those with large amounts of savings, another key benefit of using a savings platform is the distribution of the FSCS protection given to each individual banking license.
The Financial Services Compensation Scheme (FSCS) is the UK’s Deposit Guarantee Scheme, offering protection up to £85,000 per person or £170,000 in the case of joint accounts with any eligible bank or mortgage lender they sign up with.
By giving savers access to more than one provider, savings platforms allow them to spread FSCS protection across their multiple holdings.
For example, if they were to save with six different banks all covered by the FSCS on the platform, they would be protected up to £85,000 in each account – notwithstanding any additional funds they might hold separately with the bank outside the platform.
Right now there are only a handful of savings platforms. Raisin and Hargreaves Lansdown’s rivals include: flagstone, AJ Bell’s Money Savings Hub*, and Aviva Save.
However, according to the Savings guru, the savings market sector is expected to grow as new entrants enter the market in the coming months.
“We expect someone with a strong brand name active in the financial services industry, such as John Lewis, to enter the market.
“We also believe that Aviva Save will eventually get its act together and become a force when it has been a complete flop so far.
“Of the incumbents, Hargreaves Lansdown is growing strongly, but there’s such huge potential that it’s a gateway to everything else the company does, that with the right support will boost it.
Flagstone has made significant investments to continue growing and expanding internationally and Raisin is showing signs that it can be a force here, as it is in Europe.
“We expect savings platforms to shift from less than 1 percent of the market to more than 5 percent in the next three years.”
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