While the mainstream banks look to be – ay long last – pulling out of their decline, the challenger banks continue to challenge very successfully. The latest news comes from our friends at AltFi.
Digital challenger Starling Bank maintained its hold in the final quarter of last year as one of the most switched-to UK banks of 2020, according to AltFi.
“Figures today from the Current Account Switch Service (CASS) show Starling Bank in 2nd place during October and December 2020 with 15,960 customers using the service to switch their primary account to Starling.
That was behind Lloyds Bank, which saw 29,556 net switches buoyed by its £100 cash bonus for new customers, but ahead of Clydesdale Bank with 8,584 switches.
The figures echo Q3 of 2020 when Starling was also the 2nd most switched-to UK bank with 12,652 net switches, and Q2 when Starling was the No.1 most switched-to bank with 11,998 net switches.
Unlike many of the larger incumbent banks which often offer £100 or more to incentivise customers to switch, Starling has remained at the top of the league tables without ever offering a financial incentive for customers to make the jump.
Loan Offer Latest
Historical Performance And IFISA Process Guide
That figure is the result of over £20 million of loans facilitated on the site, as we bring individuals looking for a good return on capital together with carefully vetted small companies seeking funds for growth. Bear in mind that lenders’ capital is at risk. Read warnings on site before committing capital.
All loans on site are eligible to be held in a Money&Co. Innovative Finance Individual Savings Account (IFISA), up to the annual ISA limit of £20,000. Such loans offer lenders tax-free income. Our offering is an Innovative Finance ISA (IFISA) that can hold the peer-to-peer (P2P) business loans that Money&Co. facilitates. For the purposes of this article, the terms ISA and IFISA are interchangeable.
So here’s our guide to the process:
The ISA allowance for 2020/21 is unchanged from last tax year at £20,000, allowing a married couple to put £40,000 into a tax-free environment. Over three years, an investment of this scale in two Money&Co. Innovative Finance ISAs would generate £8,400 of income completely free of tax. We’re assuming a 7 per cent return, net of charges and free of tax here.
Once you have made your initial commitment, you might then consider diversifying – buying a spread of loans. To do this, you can go into the “loans for sale” market. All loans bought in this market also qualify for IFISA tax benefits.
Risk: Security, Access, Yield
Do consider not just the return, but the security and the ease of access to your investment. We write regularly about these three key factors. Here’s one of several earlier articles on security, access and yield.