My money’s on the Great Vampire Squid
YOU may have a view on the past business ethics – or lack of them – of investment bank Goldman Sachs. But you cannot knock the financial institution for stirring up things in the savings market.
Its eye-catching Marcus account, launched late last month, has set the cat among the bank and building society pigeons.
Paying interest of 1.5 per cent on balances between £1 and £250,000, it has attracted savers in their tens of thousands, even though the rate trails inflation at 2.4 per cent.
Although the response from the savings industry has been muted, Marcus has provoked a few kindly strays to respond – Virgin Money (1.42 per cent), Shawbrook, Charter Savings and Tesco (all 1.4 per cent).
Even the parsimonious Royal Bank of Scotland has reacted.
Notorious for paying savers wretched rates of interest (for example, until recently a paltry 0.1 per cent on Instant Saver), it is now offering an account that on rate matches new kid on the block Marcus. Miracles never cease, I hear you say.
It is called Savings Builder and it was previously only available through NatWest.
Although married on headline rates, Savings Builder should not be mentioned in the same breath as Marcus.
While Marcus is a refreshingly transparent product devoid of catches (hallelujah), Savings Builder has more conditions than a hypochondriac has ailments. It is riddled with hoops and hurdles.
With Marcus, you open an account online and earn 1.5 per cent interest. You can then withdraw money when you want. The only issue to be aware of is that interest is variable, so it can be cut at the whim of the bank and not necessarily raised when Bank base rate rises.
There is also a 0.15 per cent bonus within the 1.5 per cent that will drop off after a year.
With RBS Savings Builder, you first need to be one of the bank’s current account customers. No current account, no Builder, sorry.
Then to qualify for 1.5 per cent, you must grow your savings balance by at least £50 a month. Fail to do that in any month and you forfeit all interest in that particular month.
Also note use of the word ‘grow’. If you make a £50 deposit in one month but then withdraw £20, you will only have grown your balance by £30.
So again you will be disqualified from earning interest in that month.
The final caveat is that once your savings balance tops £10,000, you will only receive 0.2 per cent interest on the excess.
In a nutshell, you will get 1.5 per cent on a maximum £10,000 of savings (not £250,000 as with Marcus) – and only if you are financially disciplined on your journey to that sum.
In the bank’s defence, RBS Savings Builder is a slightly better product than it was previously when only available under the NatWest label. Then 1.5 per cent was available on a maximum of £5,000 – and until April this year, you had to grow your savings balance by at least £100 to qualify.
But the fact remains that whereas Marcus is simple, Savings Builder is like walking a financial tightrope. One false move and you fall off.
I know which account I would choose although I never thought I would ever say it: Marcus, courtesy of the Great Vampire Squid. METRO Bank may be more customer focused than most high street rivals (not difficult), but it does not always behave impeccably.
From the middle of January next year, it is pushing up the charges it levies when customers use their plastic outside Europe – from 2.75 per cent to 2.99 per cent.
For cash withdrawals, there will be an additional £1.50 charge.
For the record, it will be the third hike since March 2014 when the fee stood at 1.9 per cent – plus £1 for cash withdrawals.
I wonder what Sir Duffield II, the chairman’s Yorkshire terrier, would feel about this if he were a customer? Barking mad?
Marcus is simple ...but the Savings Builder is like walking a financial tightrope