The choice is yours
Cash platforms can help find the best place for savings, but at a cost, says Paul Lewis
Cash is a lazy creature. There are hundreds of billions of pounds languishing in accounts that either pay no interest at all or very little. And because the banks can deposit spare cash with the Bank of England and earn the Bank Rate (which is now 4%), they are under no incentive to encourage us to move it where it will work harder. So it’s up to us.
If you have high five- or six-figure sums in savings, there is a new way to make sure your cash is earning as much as it can for you. It’s called a “cash platform” and it takes most of the work – although not quite all of it – out of finding the accounts with the best rates and moving your money to them.
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Big names with cash platforms include Flagstone, Insignis, Raisin and Hargreaves Lansdown Active Savings. You register once with the platform you choose and transfer your money to your account with it.
You can then go online and move your money easily to the best-paying accounts that they list, without any further formality. You will be able to see where your money is and what it’s earning. At the end of the tax year you will get a statement showing how much interest has been earned, which you can use to see how much tax you may owe on it.
If a bank cuts an easy-access interest rate, or when a fixed rate comes to an end, you will be warned, so you can easily find the best new home for your money.
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Transfers can take a day or two, which is slower than if you open accounts directly online. A platform will not have the range of best-buys you can find for yourself, and the accounts they do list may offer rates lower than those on the open market. Platforms also charge you – perhaps a percentage of your total savings or a slice off the interest you earn, or they take a fee from the bank you move money to.
Platforms are great if you have significant cash and want to save time and hassle when you move it to get the best rates. But it’s important to check the total cost and that you are happy it represents value for money.