Bank account: Britons can secure 1.25% interest rate – but must consider their eligibility

Martin Lewis shares his prediction for interest rates

When you subscribe we will use the information you provide to send you these newsletters.Sometimes they’ll include recommendations for other related newsletters or services we offer.Our Privacy Notice explains more about how we use your data, and your rights.You can unsubscribe at any time.

Bank account interest rates took a tumble back in March 2020, with the decision taken by the Bank of England to lower its base rate to 0.1 percent particularly affecting. Since then, providers and savers have been reckoning with lower rates and a lack of incentive to put money away. For those hoping to grow their funds, the circumstances have been dire, with many hunting for the best deals.

However, hard-pressed savers may be pleased to note a banking app is currently offering a favourable interest rate, likely to entice people right across the country.

Chip, a smartphone banking app, is at present offering a 1.25 percent interest rate through its Chip+1 offering.

The account, the organisation states, is paying the market’s best return, providing a safe haven for savers.

Through the account, Britons can secure this interest rate on savings up to £10,000 – with fees applying – or up to £2,000 on the app’s free plan.

The account is also easy access, meaning savers will be able to get hold of their funds at any point when saving.

All money deposited into a Chip+1 account is held in a segregated trust account with the UK authorised ClearBank.

It is also eligible for the Government backed Financial Services Compensation Scheme (FSCS) which guarantees protection for funds up to £85,000.

The 1.25 percent interest rate is added to a person’s Chip+1 balance once every 12 weeks.

DON’T MISS
TV Licence: Many retirees eligible for free licence & £3,000 each year [INSIGHT]
PayPal warning: Britons attacked by dangerous scam text message [ANALYSIS]
NS&I Premium Bonds could help Britons as interest rates plummet [UPDATE]

In addition, there is no time limit for the 1.25 percent bonus, and it is not set to expire at any date.

However, it is worth noting the interest rate is variable, and therefore it can be changed at the organisation’s discretion.

Britons, though, will only be able to access this market leading account if they are invited to do so by a friend.

An existing Chip customer is required to share what is known as a VIP code with a friend who does not yet have the banking app.

Existing customers will be able to invite as many people as they so wish to use the Chip+1 account, but only one person will be able to get access using the VIP passcode.

Chip has said it is able to offer the 1.25 percent interest rate to its customers by using its advertising budget.

It provides this sum directly to savers in return for them recommending the service to others.

At present, the Chip+1 account can hold up to £85,000 – the same amount protected by the FSCS.

However, the 1.25 percent bonus rate is only paid on the first £10,000 for subscribers, and £2,000 for those on the free plan. 

With a number of banks currently offering interest rates of anywhere between 0.01 percent and 0.50 percent, the Chip offering is likely to have incentives.

But Britons are generally advised to undertake their research before deciding on any bank account, to see if it is the right option for them. 

The future for interest rates is, as of yet, uncertain, but Bank of England officials have stated negative rates are an option currently ‘in the toolbox’.

This is a policy which has never before been enacted in the UK, and so may have widespread implications for both borrowers and savers.

Source: Read Full Article