If you have savings, take note. Zopa has launched a new easy access savings account offering savers the chance to earn up to 1.05% AER interest.
Let’s take a look at how the new account works and how it compares to other savings rates available.
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How does Zopa’s new savings account work?
Zopa’s new Smart Saver account pays savers 0.72% AER variable interest on balances between £1 and £15,000. To open it, you’ll need to download the Zopa app on your smartphone.
You can save from as little as £1 to a maximum of £15,000. You can make as many withdrawals as you like.
Plus, as an unusual quirk, you can boost the savings rate to 1.05% AER interest. To do this, you must open one of Zopa’s ‘boosted pots’ and select the 95-day notice option. Anything that you save into this linked pot will then earn the boosted interest rate. However, as its name suggests, you will have to give 95 days’ advance notice if you wish to make a withdrawal from the pot.
If you’d rather not have such a long notice period to access your cash, then you can select a shorter notice period instead. There are also 7-day and 31-day notice periods available. If you select the 7-day period, your linked pot will earn 0.75% interest, while the 31-day pot will earn you 0.85% AER interest.
In other words, the longer the notice period, the higher the savings rate.
What else should you know about Zopa’s new account?
Savings rates offered on Zopa’s new account are variable, meaning they can change in future. That said, if rates drop, you’ll be given sufficient notice and you’ll have the option of closing your account and moving your savings.
It’s also worth being mindful that while you may prefer to keep easy access to your money, Zopa says that a notice period attached to some of your savings may mean you’ll be less tempted to dip into your pot.
Unusually for a savings account, Zopa’s Smart Saver only allows you to save up to £15,000. This is low compared to other savings accounts, as you can typically save far more than this. Zopa says this low limit will allow it to ‘serve a greater number of customers, who wish to grow their savings over time.’
Importantly, Zopa’s Smart saver has full FSCS savings safety protection. This means that if the provider goes bust, your savings are safe.
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How does the account compare to other savings rates available?
While Zopa’s new offering is technically ‘table-topping’ in terms of easy access, it’s worth being aware that the account is a sort of hybrid. That’s because it sits between an easy access account and a notice savings account.
Currently, the highest easy access savings rate is from Atom Bank, which pays 0.75% AER variable. This is a tad more than Zopa’s non-boosted ‘Smart Saver’ offering but significantly lower than its boosted 1.05% rate. To open Atom’s account, you must apply via its mobile app.
Alternatively, the second-highest savings rate available is from Cynergy Bank. Its account pays 0.72% AER interest, which is the same rate as Zopa’s non-boosted Smart Saver. However, this rate includes a fixed 0.42% bonus for 12 months.
Both of the above alternative accounts can be opened with as little as £1.
In terms of notice accounts, Charter Savings Bank is the best alternative to Zopa. Like Zopa’s Smart Saver, it has a 95-day notice period. Right now, this account pays savers 1.02% AER variable interest. However, to open it you’ll need to have at least £5,000 to save.
For more options on where to stash your cash, see The Motley Fool’s top-rated savings accounts of 2022.
The post New ‘table-topping’ savings account pays up to 1.05% interest: here’s how it works appeared first on The Motley Fool UK.
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