MTTM Podcast Episode 493 – Best investing apps, top banks to switch to & the risks of paying via your banking app

Listen to Episode 493

In this episode I reveal the best investing and trading apps in the UK. We look at the latest current account switching data, revealing the banks & building societies that are gaining (and losing) the most customers. Finally, Andy warns about the risks of using the "pay by bank app" payment method and the lack of consumer protection it offers.

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This show is sponsored by Lightyear*, a new, straightforward platform offering a Stocks & Shares ISA. With no account, subscription or custody fees, Lightyear’s Stocks & Shares (S&S) ISA will be 10 times cheaper than the average market provider over 10 years (based on research conducted by Capital Economics) and its Cash ISA offers easy access to the Bank of England base rate. Both accounts are flexible, so you can withdraw and re-invest without affecting your annual limit. Capital is at risk and ISA rules apply. Other fees - like foreign exchange fees - may apply. Lightyear UK Ltd is authorised and regulated by the Financial Conduct Authority

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Episode 493 Podcast Summary

Best investing and trading apps in the UK

Summary:

In the first segment, I provide an in-depth look at the best investment and trading apps for UK investors. I cover a range of scenarios to help listeners identify the platform that best suits their needs - whether that's a hands-off managed portfolio, a cost-conscious passive approach, or an active stock trading strategy. I walk through a comprehensive checklist of factors to consider, such as fees, investment options, user experience, and customer support. By the end, listeners should have a clear idea of the top apps to explore further based on their individual investing goals and preferences

Key Insights:

• Thoroughly evaluate platform fees, including account management, trading, and fund charges
• Ensure the app offers the investment types you want to access, such as stocks, ETFs, bonds, etc.
• Consider the range of account options available (e.g. ISA, pension, general investment account)
• Understand the minimum investment amounts and interest paid on uninvested cash
• Determine if ethical investing or social trading features are important to your strategy

Latest bank switching data and deals

Summary:

In this section, Andy looks at the latest data from the Current Account Switch Service (CASS). He explains how the free service allows consumers to seamlessly switch their current accounts between participating banks and building societies. He highlights the key findings, including the total number of switches in the last 12 months, as well as the banks that have seen the highest net gains and losses. He also uncovers the top reasons people are choosing to switch, with factors like better online banking, higher interest rates and attractive switching incentives playing a significant role.

Key Insights:

• The Current Account Switch Service facilitated over 1.2 million account switches in the last year
• Nationwide, Barclays, TSB, and Lloyds saw the highest net gains, while Santander, NatWest, and Halifax experienced the most net losses
• Nearly half of switchers cited a preference for the new bank's online banking process as the primary reason
• 32% of switchers were attracted by better interest rates on current accounts
• 27% of switchers were motivated by spending benefits and cash incentives to switch banks

Warning if you pay online via your banking app

Summary:

In the final section of the podcast, Andy discusses the rising popularity of a payment method being offered by some online retailers - the 'pay by bank app' option. This allows customers to seamlessly transfer funds directly from their bank account to the retailer, using their mobile banking app and biometric authentication. While this may seem convenient, people should be aware that they are not covered by any consumer protection. Those paying by credit or debit card would most likely be covered by Section 75 of the Consumer Credit Act or the chargeback scheme. Andy advises listeners to carefully consider the trade-offs before utilising this new payment option, especially for larger purchases.

Key Insights:

• Some online retailers are now offering a "pay by bank app" option for faster, more seamless payments
• This method involves directly transferring funds from your bank account to the retailer, bypassing credit/debit cards
• Paying this way means you forgo the consumer protections offered via credit/debit card payments, like Section 75 and chargeback schemes
• The lack of these protections could be risky, especially for more expensive purchases
• Consumers should weigh the convenience against the potential loss of important safeguards when considering this new payment method

Episode quiz

Questions

1. Which investment platform becomes more cost-effective for larger portfolios due to its fixed fee structure?
   a) Nutmeg
   b) Interactive Investor
   c) Wealthify
   d) InvestEngine
2. What is the minimum investment amount for Nutmeg and Money Farm's managed portfolio services?
   a) £1
   b) £25
   c) £100
   d) £500
3. Which bank saw the highest net switch gains according to the data from the Current Account Switch Service (CASS)?
   a) Nationwide
   b) Barclays
   c) TSB
   d) Lloyds
4. The Current Account Switching Service facilitated how many account switches in the last 12 months?
   a) 500,000
   b) 1 million
   c) 1.2 million
   d) 2 million
5. Which statement best describes the "pay by bank app" payment method?
   a) It allows you to make payments directly from your bank account to the retailer using your mobile banking app and biometric authentication
   b) It is a type of payment that provides the same level of consumer protection as paying by credit or debit card
   c) It is a new payment method only available to Apple Pay users
   d) It is a payment method that is only available for small purchases under £100

Answers

1. b) Interactive Investor
2. d) £500
3. a) Nationwide
4. c) 1.2 million
5. a) It allows you to make payments directly from your bank account to the retailer using your mobile banking app and biometric authentication

Resources

Links referred to in the podcast:

• Interactive Investor review
• InvestEngine review
• AJ Bell Dodl review
• Freetrade review
• Moneyfarm review
• Wealthify review
• Nutmeg review
• Lightyear review
• Best investing apps in the UK
• Check out all our investing reviews
• Latest bank switch data
• Best bank account switching offers