Savers have had a miserable few years. We have characterised this period of very low yields on deposit accounts as the Great Savings Robbery.
Digital banking service Revolut today announced it’s introducing interest rates on savings vaults for its non-fee paying customers.
The fintech is offering 0.15 per cent interest on cash up to £85,000, a hair higher than its closest competitors Monzo and Starling which offer rates of 0.10 per cent (on Monzo’s easy access pot) and 0.05 per cent (on Starling’s current account) respectively.
“To date, Vaults have helped over 2.5 million people build towards their financial goals. Now, we are excited to roll out Savings Vaults with daily interest and no fees to standard plan users to help them achieve their goals faster,” Marsel Nikaj, head of savings and lifestyle at Revolut said.
“We are also looking forward to bringing this product to European markets in the near future to enable anyone to earn money on their savings, even in a negative interest rate environment.”
Up until now, only Revolut’s paying customers could earn interest on their savings, with the fintech offering up to 0.40 per cent on GBP savings and up to 0.65 per cent on USD.
Historical Performance And IFISA Process Guide
That figure is the result of over £24 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.