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.

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.

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.”