The main reason that people don’t switch their bank account is that they think it will be a hassle.
This is why an estimated £258 billion of savings is sitting in accounts paying 0 per cent interest.
A new breed of money websites claim to make the process stress-free by letting you sign up once, then giving you access to hundreds of savings accounts — but you might not get the best rates.
Savings platforms let you open one account and apply for multiple savings accounts through it without having to apply again for each one. They also show you hundreds of different accounts at dozens of banks so you can compare rates easily.
There are now at least eight of these platforms to choose from, after the over-50s insurance, holiday and finance company Saga and the consumer website Savings Champion recently launched their own. Others are run by the insurer Aviva, investment platform Hargreaves Lansdown and the financial services businesses Akoni, Flagstone, Insignis and Raisin.
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But while it might be easier to open an account through these platforms, you won’t necessarily get the best rates.
The top one-year bond on the market is 6.11 per cent from Union Bank of India, for example, while the best on a savings platform is 5.95 per cent from Al Rayan Bank — available on Raisin and Savings Champion’s Savers Hub.
But for some, the convenience may be worth giving up a little bit of interest.
“Many people put off moving their money by the administrative burden of opening, monitoring and switching their savings accounts,” said Daniel Darragh from Savings Champion. “Platforms could be the solution to reducing that. They’re not necessarily for the rate chasers, but there’s a real benefit for those who don’t have the time or energy to keep monitoring, switching and splitting up money between accounts.”
How do they work?
While each platform varies slightly, the main principle is the same. First, you register with the platform, which handles all the anti-money laundering and customer checks on behalf of the banks available on it. This is why you don’t need to submit full applications for each account.
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You can then open accounts with any of the banks available on your chosen platform — most require a minimum deposit, ranging from £1,000 through to £100,000.
Not all platform have the same accounts and banks. Aviva Save gives access to 28 savings accounts from six banks, and Flagstone 190 savings accounts across 59 banks. Raisin is particularly good for those who prefer savings bonds. Two of the top five one-year bonds are available exclusively through Raisin — the Turkish bank Ziraat pays 5.9 per cent, for example, while the Estonian bank LHV pays 5.8 per cent.
• Times Money Mentor: Best savings accounts 2023
One important thing to note is that you will have to pay for the service — be sure to factor this into the savings rate. Akoni, Insignis and Savers Hub charge a percentage of the amount you save, ranging from 0.1 to 0.25 per cent.
If you opened the 5.95 per cent one-year bond on Savers Hub with £50,000, you would earn £2,975 in annual interest. But after the 0.25 per cent fee (£125) your effective interest rate would drop to 5.7 per cent. Other platforms such as Hargreaves Lansdown and Flagstone take a cut of the rate you receive from a bank, which is why the rate you get through them is slightly lower than you could get by going direct.
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When using a platform to access a savings account, you still get the same protection from the Financial Services Compensation Scheme, which covers up to £85,000 if a bank fails (check the bank is in the scheme because not all are).
If your money is on the platform but you haven’t yet chosen a bank, your cash will sit in a transaction account. This is a ring-fenced bank account, which is also protected by the FSCS.
Who are savings platforms for?
Platforms tend to be most useful for savers with large amounts of money that would not all be protected by the FSCS (which protects deposits of up to £85,000) if they kept it in one place, because they can more easily spread it across different banks without having to go through multiple application processes.
Most platforms provide an annual income statement, which shows what you have earned from all your individual accounts, helping to minimise the paperwork and making it easier to keep track of a potential savings tax bill. Basic-rate taxpayers can earn up to £1,000 a year in interest tax free, and higher-rate taxpayers £500. Interest earned on cash saved in an Isa is not subject to tax.
• Have you already triggered a tax bill on your savings pot?
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Platforms are also good for savers who want to make sure they are earning decent (if not necessarily the best) rates because they can more easily compare accounts and move their money.
Sarah Coles from Hargreaves Lansdown said: “Platforms can help you to make more from your savings without turning it into a full-time job. It’s much easier to switch between competitive accounts with different banks, and keep an eye on everything in one place, and then get on with the rest of your life.”
And who should avoid them?
Those who only want the absolute best rates and have smaller amounts of money will not benefit as much from using a platform. Even the most comprehensive platforms only offer access to a fraction of the more than 1,000 savings accounts available on the market.
If you have less money it may be easier to open a savings account directly, because you don’t need to worry so much about spreading your cash around to keep within the FSCS limits.
If you’re worried about a tax bill on your savings, Hargreaves Lansdown Active Savings may be the best choice — it is the only platform to offer access to Isas, although it has just two accounts on its platform. Both are from Coventry Building Society, paying 3.3 per cent on easy-access and 5.08 per cent on an account that allows three withdrawals a year. Neither allows transfers from an existing Isa.
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That means that for those who want to shelter up to £20,000 of their savings a year from tax, a platform is not the answer.
Savings platforms at a glance
• Best for overall choice: Flagstone
• Best for the top rates: Raisin UK
• Best for easy-access rates: Savings Champion Savers Hub
• Best for fixed-rate bonds: Raisin UK
• Best for Isas: Hargreaves Lansdown Active Savings (because there’s no one else)
