What is a savings platform?
A savings platform is an online savings hub that gives you access to a wide choice of savings accounts from a range of banks and building societies in order to maximise the interest you earn, via a single website. Traditionally, savers had to shop around to find the best savings accounts and then open an account with the chosen bank or building society directly, either online or in-branch. If /when the bank subsequently cut its interest rates, or better rates were on offer elsewhere, savers had to repeat the process in order to secure a better interest rate. This takes a lot of time, effort and administration which is why most savers end up leaving their savings languishing in savings accounts paying little or no interest.
A cash savings platform such as Hargreaves Lansdown’s Active Savings* allows you to open and move money between savings accounts at a range of partner banks and building societies using just one login and a click of a button.
How do savings platforms work?
Savings platforms all work in a similar way. Each savings platform will have a panel of banks and building societies to which it gives users access to those institutions’ savings accounts. While there will be some overlap, different savings platforms will offer access to different banks and building societies. The types of savings accounts can range from instant access savings accounts to fixed-term savings bonds. Because savings platforms only work with a panel of partner banks they do not offer access to all of the savings accounts available in the market. As such savings platform do not guarantee the best interest rate on your savings, although they occasionally will offer the best interest rate in the market. It is obviously dependent on whether any of their partner banks or building societies currently top the savings best-buy tables. Hargreaves Lansdown Active Savings currently offers the best-limited access savings rate in the market.
When you’ve chosen your desired savings platform you need to register and deposit your savings in its ‘hub’ account. The hub account is where your cash is temporarily deposited and withdrawn from. So whenever you move money between savings products the money will be moved via the hub account. It is always important to check which bank or building society this hub account is provided by and whether your money is covered by the Financial Services Compensation Scheme (FSCS). I provide details of the FSCS protection offered by the best savings platforms in the table later in this article.
Savings platform providers
There are a number of savings platforms in the UK which are listed below:
In September 2020, Octopus Cash announced that it was to close its cash management business as it could no longer justify the fees it was charging its clients, given how low savings interest rates have fallen. For that reason it is not listed above.
Each platform offers access to a different number and type of savings accounts and while some platforms charge an annual fee to manage your money, some are free to use. Those that are free to use are Raisin and Hargreaves Lansdown Active Savings. With these services you pick and choose the savings accounts you want to move your money into and out of. Insignis Cash Solutions and Dynamic Cash Management charge annual fees but they will recommend savings accounts for you and manage the administration process. In the next section, I compare the cash savings platforms side by side.
Best and cheapest savings platform
The table below provides a comparison of the leading cash savings platforms in the UK. Of the five services, only Hargreaves Lansdown and Raisin offer free services, with the former pipping the latter in offering better interest rates at the moment and a lower minimum deposit. If you are a business or charity looking to use a savings platform then Flagstone, Insignis Cash Solutions or Dynamic Cash Management may be interest. The last two also differ in that they recommend and manage the administration of the savings accounts on your behalf but there is a significant cost, given how low interest rates are, to use them.
|Savings Platform||Hargreaves Lansdown Active Savings*||Raisin UK||Flagstone||Insignis cash solutions||Dynamic cash management|
|Fees (maximum)||FREE||FREE||£500 upfront fee then up to 0.25% p.a.||0.25% of interest||0.30%|
|Hub account provided by||Barclays||Starling||Barclays||Barclays||
Cater Allen Private Bank
|Hub account covered by FSCS?||Yes||Yes||Yes||Yes||Yes|
|Number of partner banks||10||17||40+||30||40|
|Top instant/limited access rate (individual accounts)||0.95%||n/a||0.85%||n/a||n/a|
|Best 3 year bond rate (individual accounts)||1.20%||1.10%||1.45%||n/a||n/a|
|Who it can help||Individuals||Individuals||Businesses / Individuals / Charities||Businesses / Individuals / Charities||Businesses / Individuals / Charities|
Is my money FSCS protected?
If you hold money with a UK-authorised bank or building society then if it were to go bust then the Financial Services Protection Scheme (FSCS) would protect you up to £85,000 per person per bank or building society or £170,000 for a joint account. Some banks and building societies are part of a larger organisation and have multiple brands which share one banking licence. An example of this is HSBC and First Direct. In such instances, if you were to hold more than a total of £85,000 in bank accounts in your sole name across both HSBC and First Direct then the FSCS will only cover you for up to £85,000 in total if both banks were to go bust.
When you use a savings platform to place money with a bank or building society your money should be covered under the FSCS, assuming that the account is in your name. However, you need to take into account your existing savings accounts elsewhere when you are using a savings platform as the FSCS limits are applied across all of your savings, whether they are held via a savings platform or not. So if you had £50,000 with the Coventry Building Society directly and another £50,000 in your sole name via a savings platform then the FSCS would only cover you for up to £85,000 if Coventry Building Society went bust.
Savings platforms themselves are not banks but instead place your money temporarily in a hub account, usually operated by a UK bank. Using the hub account, money is placed or withdrawn from the savings products of your choice. Therefore your money is only at risk, when not in a savings product, if the provider of the hub account goes bust. The table above shows how your savings are fully protected under the FSCS when using the listed savings platforms. However, bear in mind that if you already have money elsewhere with the bank offering the hub account, then your money won't be fully protected unless the total stays within the FSCS limits. For example, Hargreaves Lansdown's hub account is held at Barclays. Therefore if you hold £50,000 in your sole name already with Barclays and if you were to use the Hargreaves Lansdown Active Savings service with £60,000 in the hub account for a period of time, then your money would not be fully protected under the terms of the FSCS if Barclays was to go bust at that point.
Pros and cons of savings platforms
There are a number of advantages and disadvantages to using a cash saving platform:
Pros of using a savings platform
- easy to shop around and secure better savings rates
- only need one login and password
- occasional exclusive savings rates on offer
- your savings should be FSCS protected if the accounts are in your name
- some savings platforms are free to use
Cons of using a savings platform
- not every savings account in the market will be available via your chosen platform as they only offer products from a panel of partner banks and building societies
- some savings platforms charge fees, which could negate the benefit of using them
- the minimum investment amount can be higher than if you went directly to the bank or building society
- you need to double-check whether your savings are covered under the FSCS (see table above)
Are savings platforms any good?
Savings platforms are ideal for people who have a significant amount of savings but who don't want the administrative hassle of having to shop around and continually open/close savings accounts. Savings platforms provide an incredibly easy way to manage multiple savings accounts using a central online hub. Hargreaves Lansdown, one of the UK's largest financial services companies, has brought the concept to a wider audience with the launch of its free to use Active Savings service. At present, it has one of the market-leading limited access savings rates and the lowest minimum deposit of all the savings platforms out there (at just £1). For consumers, savings platforms services do offer an easy way to increase the amount of interest that they are earning on their savings, but if they want to guarantee the maximum interest rate possible they will still have to shop around in the old fashioned way.
Alternatives to savings platforms
If a cash savings platform is not for you, then have a look at our savings best buy tables. Alternatively, read my guide 7 steps to get the most interest on savings over £100,000. The guide will tell you what to look for in best buy tables as well as the 7 key rules of saving large sums over £100,000. Finally, listen to Episode 277 of the MTTM Podcast where I explain how to boost your savings interest rate by building a cash ladder.
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