The platforms that could supercharge your savings

Banks are offering the best interest rates in years – but too many savers are failing to cash in on bumper returns by not switching to the top-paying accounts.

If you’re the kind of saver who doesn’t have the time – or inclination – to monitor the best rates, you might want to sign up to a savings platform; a service that does the legwork for you. What’s more, some often have better interest rates that you can’t find elsewhere.

A study recently revealed that half of all savers have not switched their savings account in the past year, which means many will be missing out on superior rates available. And nearly half of savers are missing out on cash by choosing to leave their savings in current accounts, which typically pay poor rates of interest – some pay nothing at all.

The study, by Shawbrook Bank, highlighted that this means the value of savers’ cash will have fallen as runaway inflation erodes spending power. Put simply, your money won’t be able to buy as much as it used to.

Here, Telegraph Money explains how using a savings platform could solve this problem – introducing the major providers, how the service works and the things you need to watch out for.

How do savings platforms work?

Rather like a supermarket for savings accounts, these services offer you access to a range of providers under one roof.

Some of the biggest providers include AJ Bell Cash Savings Hub, Flagstone, Hargreaves Lansdown Active Savings, Insignis Cash Solutions and Raisin UK.

Sign up processes may vary, but in general you can expect to sign up to the platform, either on an app or using the website to open your account, and transfer your savings to the platform’s “hub account”.

This is where your money is stored during the times when it’s not held in a savings product. Hub accounts usually don’t pay interest, and may be held by a third-party bank in cases where the savings platforms themselves are not regulated to hold money directly.

Each platform has a number of savings provider partners – banks and building societies that you may or may not have heard of. In general, the largest high street banks cannot be found on a savings platform; providers tend to be fairly small, or online-only. As a customer, you can access the savings accounts they offer, some with better rates than you can get anywhere else.

The attraction is you can then move your money freely between multiple accounts and providers, depending on which are on the platform at that time, and what they’re offering.

Better still, you can access the rate you want at the click of a button, without the need to fill in an application form every time, or having to remember yet another login or password.

Some platforms also have features that alert you when a fixed term is coming to an end, meaning you can plan ahead to make sure your money is consistently earning a competitive rate of interest.

Daniel Darragh, research and development manager at comparison site Savings Champion, said: “This saves time for savers trying to trawl the market looking for the best savings deals and then applying for each account individually. It reduces administration and paperwork, as everything you need – annual interest statements, a summary of cash positions – is provided in one single, secure place.”

How do savings rates compare?

Fixed-rate savings accounts, where you lock up your money for a set period of time, are most commonly offered on savings platforms. But there are also instant-access savings accounts – where you can usually withdraw and deposit money as often as you like – and notice accounts, where you’ll have to wait for a set period when you make a withdrawal.

At the time of writing, you can get 6.01pc through Hargreaves Lansdown Active Savings, provided by Kent Reliance. At Raisin UK, the top-rate one-year fix also pays 6.01pc, but from Al Rayan Bank. While 6.01pc is a competitive rate, it isn’t the highest you can currently find on the market. According to Moneyfacts, you could get 6.1pc for a one-year fixed-rate bond from FirstSave.

For instant-access accounts, with Raisin you can open a UBL UK easy access account which pays 4.18pc, while Hargreaves Lansdown offers the Allica Bank account at 4.07 pc.

These rates are somewhat lower than the top-rate account from DF Capital, which pays 4.55pc.

This shows one of the main drawbacks; the fact that platforms only work with selected providers means there’s the chance you could get a better deal elsewhere.

How to choose the right platform

It’s worth comparing platforms before you sign up your savings. You’ll need to consider how much you want to save, which services you want to use, and whether you’re willing to pay for them.

Hargreaves Lansdown’s Active Savings platform, AJ Bell’s Cash Savings Hub and Raisin UK are fee-free. Flagstone recently scrapped its fees, previously charging up to 0.25pc. 

Insignis Cash Solutions charges a fee of up to 0.25pc of your savings balance.

Fee-free services make their money by charging providers for the service of offering and signing savers up to their accounts.

The minimum amount you can save also varies. Hargreaves Lansdown and Raisin UK, for example, have minimum savings that depend on the individual account terms.

To save with Flagstone you’ll need at least £10,000, and a minimum of £100,000 to put away with Insignis Cash Solutions.

You may also want to take the number of banking partners into account – though be aware this can fluctuate. Flagstone currently offers accounts from over 50 cash savings providers, and Insignis Cash Solutions are working with over 40. Raisin UK has around 20 providers on its panel and Hargreaves Lansdown works with about 12.

Mr Darragh said: “To work out which is best for you, think about what you need. For example, Raisin only works with individuals – you cannot place money on the platform that is held in joint names, nor can you hold money as a business, charity, trust, or in a pension – either a self-invested personal pension (Sipp) or a small self-administered scheme (Ssas). Flagstone and Insignis offer accounts to all these groups.

“If it’s your cash Isa savings you want to keep on top of, Hargreaves Lansdown offers access to two cash Isas, though only for new Isa money, with no transfers in allowed.”

What to watch out for

Don’t forget to check how your money is safeguarded. Deposits held with regulated UK banks or building societies on a savings platform are covered by the Financial Services Compensation Scheme (FSCS), which protects £85,000 of your savings per person, per financial institution. 

Should you have more than this to save, it’s a good idea to spread your money across different savings providers. The good news is a savings platform can give you the option to do this relatively easily, and gives you a view of all accounts in the same place.

Additionally, be sure to check which bank holds the platform’s “hub” money, and how that is protected, too. For example, at Raisin UK, ClearBank provides its transaction hub account, while Hargreaves Lansdown is authorised as an electronic money institution and holds money itself while it’s in the cash hub.

Finally, while it’s always a good idea to make sure your money is earning as much interest as possible, you’ll need to factor in what it means for your tax bill. Mr Darragh highlighted that most platforms don’t deal with cash Isas – just taxable savings accounts. 

This means you could face paying tax on your savings interest if it exceeds your annual personal savings allowance. For basic-rate taxpayers, this is £1,000, dropping to £500 for those who pay higher-rate tax. Additional-rate taxpayers don’t get any tax-free savings interest.

If you were to go for the top-rate one-year fixed-term account on Raisin UK, a basic-rate taxpayer could save up to £16,000 without exceeding the £1,000 tax-free interest threshold.