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Is Marcus savings account a damp squi(d)b?

squid 1261432 640Savers have had it hard for the past ten years. With inflation higher than the rates on most savings accounts you are losing money. So why bother?

The answer is that most of us only feel comfortable with cash sitting in a savings account. I have (dwindling) cash savings and thank goodness for that, as I think my boiler might be on the way out. Most of my cash savings are in a cash Isa but if you’ve already got a fully-subscribed Isa (cash or shares) for this tax year then you need to find a standard savings account. And here’s the news: a savings account from US giant Goldman Sachs.
Goldman – called famously the Vampire Squid for its investment banking activities pre-2008 (hence the cephalod picture) – this week launched its Marcus Online Savings account for UK savers. It’s called Marcus after the bank’s founder, Marcus Goldman. What’s grabbing the headlines is the rate: 1.5%. This doesn’t sound exciting – and given that inflation is currently 2.5% then leave your cash in it and you’ll effectively lose money unless inflation falls below 1.5%. However, 1.5% is actually the best rate on an easy access, variable rate account at the moment – although be aware that the rate includes a 0.15 point bonus which only lasts a year. Yorkshire Building Society’s easy access account pays 1.41% and this doesn’t have a bonus augmenting the rate. Anna Bowes of Savings Champion points out that the lowest-paying savings accounts (such as that offered by HSBC) pay just 0.15% - so, move to Marcus and your interest rate increases tenfold. Marcus is an online-only account (although there is telephone support available) with a minimum balance of £1 and a maximum of £250,000. There are no restrictions on withdrawals or deposits.

So should you bother to move over? Sarah Coles of Hargreaves Lansdown says that 80% of UK savings are in easy access accounts and ‘many savers have stayed with an old savings account because they can’t see the point of moving while rates are low’. I’m not sure if I could be bothered to move accounts when the best rate is 1.5%. But I suppose if you’ve got a lot of money sitting in an easy access account, then it’s worth doing. However, maybe you should be asking yourself why you’ve got a lot of cash in an easy access account. There’s probably a better way to put it to work – reducing your mortgage being the best idea; looking at investing rather than saving another. So while Marcus is a good deal, the real question is why would you want sizeable cash deposits anyway?

See our guide to savings here

Old boiler? I hope it’s on the mend…
Get your Christmas (credit) cards now…

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Thursday, 13 December 2018