Insurance and investment giant Aviva has launched its own cash savings platform, This is Money may reveal, but savers will earn more by going directly to banks.
Britain’s largest insurance firm’s response to Hargreaves Lansdown Active Savings and Flagstone opened with 15 fixed rate bonds offered by Aldermore, Oaknorth and Paragon Bank in partnership with another Raisin liquidity platform.
The bonds, which have terms ranging from six months to five years, yield up to 0.65% and are open to savers able to deposit £ 1,000 or more.
Insurer and investment firm joined AJ Bell and Hargreaves Lansdown to offer cash savings market
However, savers pay the price for the convenience of being able to open multiple accounts in one place with the rates offered by Aviva Save, with the exception of the one and two year fixed rate offers provided by Paragon, which are lower than available. directly.
Savers who choose to open an account with Oaknorth through Aviva Save rather than the bank itself actually lose £ 25 interest on a £ 10,000 deposit.
He pays 0.57% to clients who open a one-year fixed rate bond directly with him, but only 0.32% to Aviva Save clients.
It takes the same cut for all terms between six and 30 months, which makes a difference of 0.25 percentage point, or £ 25 interest on a £ 10,000 deposit.
Aldermore Bank currently does not offer any fixed rate bonds directly to customers, but pays 0.3% to an easy-to-access account, the same rate it pays to those who lock their money through Aviva Save with it for 12 months. .
It was launched with 15 accounts offered by 3 banks paying up to 0.65%
On its website, live and open to customers but which has not yet been widely distributed, the insurer states: “We do not charge you for using Aviva Save. Instead, we receive payments from partner banks based on the amount of money deposited through Aviva Save.
“Savings accounts and interest rates offered directly by our partner banks may differ from those offered by Aviva Save. “
This is Money has previously warned savers about the cost of convenience when it comes to partner savings offers and markets like Aviva Save, and that customers are often better off turning to directly to banks.
|Mandate’s duration||Tariff available via Aviva Save||Rate available directly through Oaknorth||Difference|
|Source: Aviva Save / Oaknorth|
“Prospective customers should note that Oaknorth pays much lower rates through the platform than they pay directly to customers, which is something to watch out for,” said Anna Bowes, co-founder of the analyst. Savings Champion.
“That said, the advantage of a cash platform is to make it easier to open a savings account, with a single application when registering for the platform, rather than each time a new account is opened. . “
Savings platforms have become more and more popular in recent years and allow those with larger sums to spread their money while benefiting from the Financial Services Compensation Scheme.
This is because the money is split across multiple banks, allowing savers to benefit from the £ 85,000 guarantee from each bank they save with, although this must be split across all accounts they open.
Savings platforms, which allow savers to spread money across multiple banks and accounts, have grown in popularity in 2020
Money held on the Aviva Save platform but not yet deposited into a savings account is held in a ‘deposit account’ with Starling Bank, meaning that up to £ 85,000 will be protected by the FSCS.
Aviva offers stocks and Isas stocks, investment bonds and pensions, but this marks its first foray into the increasingly crowded world of investment firms offering cash savings options.
The likes of Flagstone, Hargreaves Lansdown Active Savings and Raisin have had a solid 2020s, according to James Blower, industry analyst and founder of The Savings Guru.
“Raisin’s Active Savings and Hargreaves Lansdown all saw strong growth in balances and customer numbers, while Flagstone raised £ 11million in venture capital,” he said.
Much of this was because high net worth savers needed a safe haven for their money after taking money out of the stock markets when they fell dramatically last spring.
“It’s interesting to see another treasury platform come to market, because anything that opens and changes savings accounts is welcome,” Bowes added.
“However, Aviva will have to work hard to catch up as there are already a number of competitors who have more partner banks, better rates and more types of accounts – not just fixed rate bonds.”
Raisin offers 16 fixed rate bonds ranging from six months to five years paying up to 0.95%, two easy-access accounts paying up to 0.2% and four notice accounts paying up to 0.45% .
His accounts can be opened with a minimum of £ 1,000, but some may require more.
The Hargreaves Lansdown asset management platform offers 10 one- to three-year fixed rate bonds paying up to 0.7% through its active savings platform, with two easy-to-access accounts paying up to 0.3%.
What are the best rates?
For savers who are simply looking for the best place for their money, here are the best rates:
– Easy access: Marcus – 0.5%
– One-year fixed rate: Bank Al Rayan – 0.65%
– Fixed rate 18 months: Oxbury Bank – 0.7%
– Fixed rate over two years: Gatehouse Bank – 1.1%
– 5-year fixed rate: Gatehouse Bank – 1.5%
Its easy-to-access accounts and some of its fixed rates can be opened with as little as £ 1, but others require £ 500 or £ 1,000.
Flagstone is open to high net worth savers with £ 50,000 or more to deposit and charges a fee.
Meanwhile, savers who go directly there can beat all the rates offered on these platforms with the best rates, which can be found in This is Money’s best buy charts.
A spokesperson for Aviva said there is a record volume of savings on deposits in the UK and four of its five customers currently hold cash deposits.
They added: “We know that savers are reluctant to change despite the availability of a wide range of competitive rates.
“Aviva Save responds to this challenge by presenting customers with a range of banks and savings accounts in one place to help them manage their finances easily.
“We want to make life easier for savers. Aviva Save’s range of banks and products will evolve through 2021 and beyond with new offers available.
“Once on the market, customers can access a range of savings products without having to re-register multiple times with different providers.
“And cash savings products can be used to supplement other longer-term savings vehicles, such as Isas and pensions.
For some, Aviva will handle long term investments, insurance and pensions which will also be a currency for wanting to change and manage their cash savings with them as they can do all of this from one connection.
Kevin Mountford – Grape UK
“All savings rates via Aviva Save are transparent. We believe this is a competitive offer and are constantly reviewing Raisin and partner bank rates against average savings achieved as defined by the Bank of England.
“A saver could also manage separate accounts with multiple providers. Purchases should always be encouraged when making a financial purchase. ‘
Kevin Mountford, co-founder of Raisin UK, said: “With high interest rates reaching record highs and a growing number of consumers apathetic about switching to a higher rate, any entry into the market that removing these barriers and making it easier for savers to earn more should be seen as a positive.
“The market is incredibly competitive and consumers will always have the opportunity to get a market leading rate.
“However, there are also consumers who value a relationship with a brand they trust – and for some, Aviva will handle long-term investments, insurance and pensions, because they can do it all from there. only one connection. ‘
Derek Sprawling, Director of Savings at Paragon Bank, adds: “We are always exploring new formats to make our products available to savers and already offer accounts through a range of deposit platforms.
“For the purposes of the launch, we have decided to match our base price to the rates currently offered directly to our customers.
“We will be reviewing this position on an ongoing basis based on a number of factors including funding needs and our relative competitive position on the platform. “
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