Finally a useful financial product. Hargreaves Lansdown has come up with an online cash savings hub called Active Savings. You simply put your money in the hub and then give instructions online to feed it into your choice of savings accounts offered by the hub’s partner banks.
The advantage of being in the hub is that you can shift your cash between banks with just a few clicks. There’s no endless form-filling every time you want to move for a better rate. I thought it sounded like a genius idea and was keen to give it a go. Sadly, not everything went smoothly.
I’m an existing HL client and was pleased I could get the Active Savings on the same password login as my investments. The trouble was that I’d forgotten all my passwords so I had to reset them.
After that, I set up the account quite easily. I had some cash kicking around on HL’s Vantage investment platform which I wanted to move into Active Savings. But the website wouldn’t let me.
For a few horrid moments I thought that I had lost or spent the money already. Then I realised that the money was inside an Isa. Moving it into Active Savings (which doesn’t yet have an Isa variety) would lose the tax benefits: luckily the site stopped me. HL says it will have an Isa facility soon but it would’ve been handy now. There aren’t any easy access accounts yet either, it’s all fixed term.
I had some cash in a cruddy Lloyds account paying just 0.2% a year so I whacked that over instead. I picked a 12-month fix with Indian bank ICICI paying 2.02%. The minimum subscription is £1,000 as a lump sum. It all went through and I’ve signed up to get alerts for new, top-paying accounts.
The other partner banks include Aldermore, Close Brothers, Coventry Building Society, Metro, Shawbrook and United Trust. You may not have heard of some of them but they are all covered by the Financial Services Compensation Scheme (FSCS) as is the hub itself. If any of the banks or the hub goes bust, your money will be refunded by the scheme up to £85,000 per institution.
When your fix ends, you have three days to select a new account or the money goes back to the hub where it earns nothing, so you have to be on your toes. HL makes money from the partner banks (charging them 0.25% of your balance) so it’s possible there could be better rates outside of the hub. You’d need to check before you commit.
I love the hassle-free concept but it’s early days. There needs to be a few more facilities on Active Savings before I would wholeheartedly recommend it: an Isa option is a glaring omission. But it’s definitely one to watch. Check it out here and see our SMM guide to getting the best savings rates here.