More Signs Of Life In Digital Savings Market – Plus Loan Auction Latest
With higher interest rates a widely predicted factor in our financial future, Fintech banking products are set to proliferate in the retail savings area. We’ve reported recent developments – and on banking products they must not be confused with P2P loan offerings of the type furnished on this platform – and will continue to do so.
JP Morgan’s Chase brand has today launched its first saver account in the UK, with a “market-leading” 1.5 per cent interest rate.
JP Morgan launched its digital banking brand Chase in the UK last year, in an attempt to take on the likes of Monzo and Starling Bank.
At launch, it offered customers a free basic current account with a range of simple, rewarding features to help people budget, manage, spend and set aside money.
The app-based savings account is available to new and existing Chase current account holders.
Savers can deposit up to £250,00 and can access their funds as often as they like, without fees, charges or loss of interest.
Customers can open multiple saver accounts to suit their savings goals.
Each saver account has a unique account number, enabling customers—or their friends and family—to pay in directly from other providers.
Each account can be named so it can be personalised towards a specific savings goal.
By comparison, the best current interest rates on easy access saver accounts are Aldermore (0.95 per cent); Atom Bank (0.90 per cent); Cynergy Bank (0.9 per cent); and Shawbrook Bank (0.89 per cent).
Loan Auction Latest
- The end of the tax year is approaching, and we currently have five loan auctions on site.
All these loans can be held, up to £20,000, as Innovative Finance Individual Savings Accounts (IFISAs). IFISAs are explained in more detail below. Here’s the latest from the auction room:
- Mar-Key has a credit rating of A+, a yield of 7 per cent and a term of two years. It is currently 23 per cent filled.
- HTHL Ltd has a credit rating of A+, a yield of 7 per cent and a term of one years. It is currently 15 per cent filled.
- Fleetwood Legal has a credit rating of A, a yield of 7 per cent and a term of one year. It is currently 31 per cent filled.
- Bonnington Law has a credit rating of A, a yield of 7 per cent and a term of one year. It is currently 20 per cent filled.
- Harris & Co. has a credit rating of A, a yield of 8 per cent and a term of one year. It is currently 11 per cent filled.
- You can see detail on each by logging in and downloading the credit note.
Historical Performance And IFISA Process Guide
- Money&Co. lenders have achieved an average return of more than 8 per cent gross (before we deduct our one per cent fee).
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.
- Money&Co. has been lending for over 5 years and has only had two bad debts so far, representing a bad debt rate of 0.03 per cent per annum.
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:
- Step 1: Register as a lender. Go to the login page, and go through the process that the law requires us to effect. This means we have to do basic checks on you to comply with money-laundering and other security requirements.
- Step 2: Put money into your account. This is best done by electronic transfer. We can also process paper cheques drawn in favour of Denmark Square Limited, the parent company of Money&Co.
- Step 3: Buy loans in the loan market. Once you’ve put cash in your account it will sit there – and it won’t earn interest until you’ve bought a piece of a loan. It’s this final step that requires lenders and IFISA investors to be pro-active. Just choose some loans – all loans on the Money&Co. site can be held in an IFISA – and your money will start earning tax-free interest.
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.