Savings: Expert gives advice on 'crucial' ways to save money
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Savings accounts and deals are regularly launched and improved by banks as they aim to entice new customers and going forward, an entire new player will enter the market. JPMorgan Chase has launched a new digital bank in the UK, as the American giant attempts to compete with the likes of Santander and Halifax, along with digital competitors such as Starling and Monzo.
To access the new digital bank, customers will need to sign up at chase.co.uk, after which they will be invited to download the Chase app. Customers will be able to open a current account “in minutes” via the app.
The account available offers a range of features to help people budget, manage money, spend and save. On top of this, a UK led customer support will be available to customers, who “with just a few taps” will be connected to a specialist who is available 24 hours a day, seven days a week.
Sanoke Viswanathan, CEO of the bank, commented: “We’re offering people in the UK the opportunity to experience Chase for the first time with a current account that’s based on simplicity, a fuss free rewards programme and exceptional customer service.”
The Chase current account will launch with a rewards programme offering one percent cashback on all eligible debit card spend for 12 months. This, according to Chase, has been developed in line with UK consumer debit card spending habits in order to ensure all customers can benefit from rewards on many of the things they already buy every day, including but not limited to groceries, travel, meals, entertainment, fashion, homewares, electronics, as well as flights and holidays.
There will be no fees to open the Chase current account and start earning cashback rewards. Customers will receive the cashback rewards without needing to switch their banking provider, commit to a minimum account balance or set up direct debits. The one percent cashback is payable when customers use their Chase debit card in person or online, and will be offered at retailers at home and abroad.
In addition, Chase also features:
- Customisable additional current accounts to simplify money management: configurable through the Chase app in seconds and designed to help people budget, set aside, save and spend in the way that works best for them. Each Chase account comes with its own unique account number, and the Chase debit card can be linked to it instantly, so customers can spend at any time from the account of their choice.
- Small change round-ups on which they will earn five percent interest for 12 months: customers can save as they spend by rounding up their debit card purchases to the nearest £1, and depositing the small change into a separate account where it will earn interest at five percent for 12 months. Round-ups will be rolled out to all customers over the coming weeks.
- Fee-free debit card use abroad: customers won’t be charged any fees by Chase when using their card while travelling, including for cash withdrawals at ATMs abroad.
- A numberless debit card: card details are stored behind a secure login on the Chase app, so customers don’t put their account details at risk if they lose their physical card. They can still continue to use their Chase card via their digital wallet. The debit card has been made from recycled plastic (rPVC) and all card packaging is made from recycled materials and everything is fully recyclable.
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“Having spoken extensively to consumers across the UK, we know that people want good value combined with an excellent experience, from a trusted bank. With cashback on everyday debit card spend and an interest boost on round-ups, we can help customers save while they spend on items they already buy every day,” said Mr Viswanathan.
Going forward, Chase confirmed it intends to introduce a broad range of banking products in the future, including new current account features, savings and investment accounts, and lending products.
Laura Suter, the head of personal finance at AJ Bell, examined the new product launch from Chase.
“The last US banking giant to venture into the UK retail banking market was Goldman Sachs with Marcus three years ago, and it sparked a shake-up of the savings market and a rates war that benefitted savers – which means many will have high hopes for this new offering from across the pond,” she said.
“First impressions are that this new account will blow the competition out of the water, with an attractive cashback deal and a market-beating interest rate on its savings feature. The one percent cashback is better than rivals as it’s on spending, rather than just certain bills or direct debits, and it also doesn’t require a minimum monthly deposit or come with a fee. Assuming the cashback is uncapped, the rate means that if someone spends £500 a month on their debit card they’ll get £5 back. What makes it more attractive to some is that they don’t need to switch accounts to get the offer.
“A cash round-up feature has become fairly commonplace with banks now, and it means each transaction is rounded up to the nearest pound, with the difference siphoned off into a savings account. But the fact that Chase is paying five percent interest on its round-up savings makes it very attractive. The top rate you can get from other banks paying interest on their round-up feature is 0.25 percent, meaning the new Chase rate leapfrogs those offerings.
“However, if the savings rate is only offered on the amounts saved by round-ups and you can’t add funds to it, it will be paid on a relatively small sum. It’s still attractive for those who want to get into the savings habit and earn some interest at the same time.
“There will be some drawbacks for the account for some customers, as it doesn’t have any bank branches, all the help and customer support is online or on the phone, and it must be run from an app. What’s more, some people might be wary of the name as it’s new to the UK market, although it has a long history in the US.”
Savers will likely want to take advantage of any kinds of deals they can find at the moment, as recent analysis from Moneyfacts showed rates are struggling to get above one percent.
According to its latest UK Savings Trends Treasury Report, which was released this week, average rates are as follows:
- Average easy access rate: 0.17 percent
- Average easy access ISA rate: 0.24 percent
- Average notice rate: 0.47 percent
- Average notice ISA rate: 0.31 percent
- Average one-year fixed rate bond: 0.67 percent
- Average longer-term fixed rate bond: 0.94 percent
- Average one-year fixed rate ISA: 0.49 percent
- Average longer-term fixed rate ISA: 0.79 percent
Rachel Springall, a Finance Expert at Moneyfacts, commented on what savers should do in light of these figures.
“Vigorous competition from savings providers has resulted in the average shelf life for a fixed rate bond falling to 33 days on average and all fixed bond and fixed ISA rates rose month-on-month,” she said.
“Average rates on fixed bonds and ISAs are now at their highest level all year, which will be great news to savers. However, savings providers will need to act quickly to react to the notable flux of rate rises in the market and indeed any demand from savers looking to fix their cash for a competitive return.
“Stability and progress to improve competition and choice within the savings market should be encouraged, however, not all interest rates are rising. The average no notice rate fell month-on-month and the average no notice ISA and notice ISA remained unchanged, with the latter standing at a record low. Clearly, there is far less competition between different sectors of the market – particularly on accounts where savers could withdraw their cash overnight. Savers would then be wise not to assume all rates have risen and be sure to compare carefully.
“Savers who feel uneasy in locking their money away for a year or more may find notice accounts as an alternative between fixed and easy access accounts, especially as notice rates are on the rise. Month-on-month the average notice rate rose for the fifth month running to 0.47 percent and is at its highest all year. There are many challenger banks within this arena, as there are in the fixed bond market, but where activity is lacking is within the ISA market, which could do with a healthy injection of competition. However, in a low-interest-rate environment and with savers utilising the Personal Savings Allowance, it’s understandable if some savers overlook ISAs altogether.
“Where savers feel confident to invest will require their judgement on access, and so far, the signs for 2021 point towards easy access accounts being the most favourable. Indeed, according to the Bank of England, the inflow into sight deposits during July was just over £7billion, and almost £72billion so far this year. As interest rates continue to change, savers and providers alike will need to act with pace to keep on top of rate adjustments and demand.”
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