A new bank called Marcus by Goldman Sachs pays 1.5% interest on its easy access online savings account. Who’s behind it and how does it compare with other banks?
Savings account paying 1.5%
The new savings account from Marcus by Goldman Sachs (that really is its name!) pays 1.5% on balances from £1 to £250,000. The 1.5% interest rate includes a bonus of 0.15% for the first 12 months.
SAVVY TIP: This is a variable rate account, so Marcus could reduce or increase the interest rate at any time. I’d be surprised if they reduced the interest rate in the first few months. It’s a new bank and they’re keen to attract savers.
What kind of account is it? It’s a straightforward savings account. It’s not a cash ISA. All basic rate taxpayers are able to receive up to £1,000 a year in interest from savings accounts without paying tax. That’s £1,000 in all, not from each bank. Higher rate taxpayers can get up to £500 a year without paying tax.
SAVVY TIP: Based on the 1.5% that Marcus is paying, you could have £66,666 in your account and you’d earn £999 a year in interest, so you’d pay no tax. This assumes you’re a basic rate taxpayer and that Marcus doesn’t increase in the interest rate in that 12 month period.
How can you manage the account? The savings account is branded as an online one, but you can manage it by phone if you prefer. You can find lot of information about how to set up and manage the account on the Marcus website.
How can you add money to your account? You can transfer money from your linked account or send a cheque. Normally, your linked account would be your (main) current account. However, it could be another savings account. You can only add and take out money via your linked account.
When is interest paid? Interest is paid monthly.
Is your money protected? Yes, your savings are covered by the Financial Services Compensation Scheme, up to a limit of £85,000.
Who is Marcus Bank?
Marcus by Goldman Sachs is a new savings bank from the American investment bank firm Goldman Sachs. Goldman Sachs has been around since 1869, so, although the Marcus name is new, Goldman Sachs certainly isn’t. Goldman Sachs has a Marcus branded savings bank in the United States.
Goldman Sachs has attracted several fines or has paid settlements in the United States. It was fined in 2018 for issues around foreign currency trading and it agreed to pay $5 billion in 2016 to settle claims that it misled mortgage bondholders. This settlement related to the financial crisis. It’s worth pointing out that many of the big UK banks have been fined at some point, either by UK or US regulators, or both. I’m including information about Goldman Sachs’ fines because it’s not exactly a household name in the UK.
How do its rates compare?
The Marcus account is paying nearly 0.1% more than other easy access accounts, as I write this. The best buy easy access savings accounts, according to Savings Champion, are:
Yorkshire Building Society, paying 1.41% on balances of £100 upwards on its Single Access Saver, Issue 13. You can apply by post or in a branch and manage the account online, by post or in a branch.
SAVVY TIP: This interest rate only lasts for one year and you can only make one withdrawal during the 12-month period. After that, your money is transferred into its Triple Access Saver account. This savings account is currently paying 0.85%.
Your money is protected up to £85,000, but that limit applies to all the money you have with the Yorkshire Building Society, Chelsea Building Society, Norwich and Peterborough Building Society, Egg and any money you have in an offset mortgage with Accord.
Kent Reliance Building Society paying 1.37% on balances of £1,000 upwards on its Branch and Online Easy Access Account, Issue 30. You can apply for and manage the account online or in a branch. You can take money out of the account whenever you want to. Interest is paid once a year on April 5th (or the nearest working day).
SAVVY TIP: Your money is protected up to a limit of £85,000.
Bank of Cyprus UK, paying 1.36% on balances of £1 upwards on its Online Easy Access Account, Issue 18. There’s a bonus rate of 0.36% for the first 12 months. As the name suggests, it’s an easy access that you have to open and manage online. Interest is paid once a year.
Your money is protected up to a limit of £85,000.
SAVVY TIP: Bank of Cyprus UK is being sold to a consortium of investors called Cynergy Capital. It should be sold (and rebranded) by the end of 2018.
Virgin Money, paying 1.36% on balances of £1 upwards on its Double Take E-Saver Issue 7. You can only take money out twice a year. The account has to be opened and managed online. Interest can be paid monthly or annually (on March 11th if it’s annually).
Your money is protected up to a limit of £85,000.
SAVVY TIP: Virgin Money is in the process of being sold to the owners of Clydesdale and Yorkshire Banks. The deal is at the early stages and we will probably get more detail in the autumn. It is possible that, once the merger goes ahead, the £85,000 limit will apply to savings you have with Virgin Money and Clydesdale and Yorkshire Banks. But that’s by no means definite.
Tesco Bank, paying 1.36% on balances of £1 upwards with its Internet Saver account. As the name implies, you have to open this account online. You can manage it online or via your mobile. This account includes a hefty 0.81% bonus for 12 months, so your rate will fall to 0.55% after a year.
Your savings are protected up to £85,000.
SAVVY TIP: Tesco Bank was hacked in November 2016 and it had to suspend online banking. Tesco Bank hasn’t said exactly how many customers were affected. It originally said 40,000, then 9,000. It’s thought the actual figure is much lower. All those who lost money were compensated.
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