Zopa ups easy access savings rate to 1.85%: Why the app-based bank is popular

Zopa Bank has again increased its savings rate, rewarding both new and existing customers.

It is easily accessible Smart Saver Account now pays 1.85 percent, making it the third most generous deal on the market by our savings quota.

Savers can also increase their rate up to 2.25 percent by keeping money locked up for longer through a selection of linked cancellation accounts.

Cancellation accounts allow savers to withdraw their money after a notice period, usually between 30 and 120 days, giving them better returns than they would otherwise get with an easily accessible account.

With Zopa, instead of opening a separate cancellation account, savers can have multiple ‘pots’ of money at different interest rates and with different access requirements, all in one place.

Savers can increase their rate to 1.9 percent in exchange for seven days’ notice, or 2.05 percent in exchange for 31 days’ notice.

For those willing to move their savings into a pot where they have to declare 95 days in advance to gain access, it is possible to earn 2.25 percent through Zopa.

The 95 day cancellation account is only enhanced by two deals in the entire market. Investec pays 2.35 percent on its 95 days notice, while BLME pays 2.52 percent on its 90 days notice.

All Zopa accounts are covered by the FSCS Deposit Guarantee Scheme, meaning cash is protected up to £85,000 per person.

Why is Zopa so popular?

Unlike many savings providers, Zopa passes its rate increases to those who currently have accounts with it, rather than just offering them to new customers.

It means that those who signed up for Zopa’s easy-to-access deal in July, when it paid 1.5%, will now automatically switch to the 1.85 percent rate.

Many other low-threshold savings providers prefer to raise interest rates via a new issue number, so that existing customers pay a lower rate on the previous issue.

While this could hurt savers if rates were to fall, Zopa’s ‘all for one and one for all’ approach to rates is clearly popular with its customers.

The decision to treat both new and existing customers equally, in addition to competitive rates, is arguably one of the reasons why Zopa is one of the fastest growing challenger banks in the UK.

Having only achieved its full banking license in 2020, it has already sucked up £2bn in savings.

Zopa’s Smart Saver raised £850 million in its first 7 months, while its fixed-term savings accounts have raised £1.15 billion in 24 months.

Ambition: Zopa’s leadership team says it wants billions of ‘zombie money’ inactive in UK checking accounts to work harder

However, the way it rewards savers isn’t the only thing that’s nice about Zopa.

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 7,401 ratings on the Apple App Store with an average rating of 4.9 out of 5.

How does the Zopa app work?

The sign-up 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 to and from Zopa, but most transfers take about 20 minutes.

An annual statement is available in the app for those who want to check the total tax interest.

Popular: Zopa has 7,401 reviews in the Apple App Store with an average rating of 4.9

It’s worth noting that people with an iPhone will need to be running iOS 11 or later for the app to work.

Zopa says her ambition is to make the billions of ‘zombie money’ inactive in UK checking accounts work harder.

James Blower, head of savings at Zopa said: ‘Amid the cost of living crisis and rising inflation, legacy banks’ low savings rates are exacerbating the pain for consumers and it is important that they look for alternatives.

‘Especially savings options that can offer the best combination of interest, service, accessibility and tools to manage their money.

Zopa’s Smart Saver is a great option for savers looking for better interest rates and currently offers one of the best interest rates on the market.

It’s also the first savings account to give consumers the choice to create multiple piggy banks at different interest rates and access requirements to suit their specific financial goals.

“These jars also allow customers to keep some of their savings out of reach, so they are less tempted to dive into cash unnecessarily.

‘In addition, Zopa is a safe choice for consumers. Users rate the service as excellent on TrustPilot, it has won several awards at the Savings Champion Awards and it is fully regulated by the Financial Conducted Authority and Prudential Regulation Authority, so savings are protected by the Financial Services Compensation Scheme.”

What other app-based savings providers stand out?

Atom was launched in April 2016. It offers highly competitive, easily accessible fixed savings accounts and secured business loans for small and medium-sized businesses, as well as mortgages.

Atom is a mobile-only bank, headquartered in the North East of England and a team of over 400 people.

Savings at Atom are protected by the Financial Services Compensation Scheme up to £85,000 per person.

best deal: To be two year fixed rate deal paying 3.4 percent is currently just 0.15 percentage points below the market leader.

App Store Rating: 4.7 out of 5 out of 26,947 reviews

Atom Bank has nearly 27,000 reviews on the Apple App Store with an average rating of 4.7 out of 5.

Tandem was launched in 2014 as one of the original digital challenger banks in the UK offering customers products from across the range of savings products, green home improvement loans and mortgages.

It acquired Harrods Bank in 2018 and Allium Lending Group in 2020 – a home improvement lending company.

Tandem has offices in London, Blackpool, Cardiff, Durham and Manchester and employs over 500 people.

Savings at Tandem are protected up to £85,000 per person by the Financial Services Compensation Scheme, the UK’s deposit insurance scheme.

Best deal: To be one year fix Paying 3.26 percent is just 0.14 percentage point off the market-leading rate.

Appstore Rating: 4.3 out of 5 out of 4,572 reviews.

Tandem Bank has nearly 4,600 reviews in the app store with an average rating of 4.3 out of 5.

Al Rayan Bank

Al Rayan Bank is the UK’s oldest and largest Islamic bank, established in 2004.

Savings held by individuals at the bank are protected by the FSCS up to £85,000 per person.

The bank currently serves more than 90,000 customers across the country and is the only Muslim bank in the UK to receive a public credit rating.

Instead of paying interest to depositors, Al Rayan Bank – as an Islamic bank – invests customers’ deposits in ethical, Shariah-compliant activities to generate profits.

Such rates of return yield a Shariah-compliant expected return rather than interest, as with standard accounts.

Since the Bank was founded in 2004, it has always paid at least the percentage of profit it quotes to its clients.

best deal: Al Rayan Bank’s Easily Accessible Deal pays 2.1 percent.

App Store Rating: 3.6 out of 5 out of 748 reviews

Best for instant access: Al Rayan Bank pays 2.1 percent on its easily accessible savings deal – more than any other provider.

Gatehouse Bank

This could be the best savings app for the more environmentally conscious saver.

Gatehouse Bank offers a range of fixed rate deals designed to help forests grow in the UK.

For every opened or renewed account, the bank promises to plant one tree.

Like Al Rayan Bank, its savings accounts operated according to Shariah principles. This means that no interest can be earned, but that we make a profit.

best deal: Gatehouse Banks easily accessible deal pays 2 percent, the second best rate on the market.

It also offers the second best cash isa easy access deal currently available pay 1.75 percent.

App Store Rating: 5 out of 5 out of 4 ratings.

Environmentally aware: Gatehouse Bank offers a range of fixed rate deals designed to help forests grow in the UK.