Plum, has launched a new ‘Plum Interest’ product, allowing customers to benefit more quickly and directly from higher Bank of England rates.
Plum customers in the UK are now able to hold their money in government-backed assets that more closely reflect the base rate. With Plum Interest, the variable annual rate, inclusive of fees, is 4.94%.
Recent figures show £17bn a year is missed out on due to interest rates at banks being lower than they should, and the average interest rate on people’s savings is just 3.3%. Plum Interest is designed to be a compelling alternative for people’s savings so it doesn’t remain dormant in a low-interest account, combining higher rates with daily returns.
The product offers similar benefits to a savings account, without the withdrawal and deposit restrictions associated with some high-interest products. Money held in Plum Interest will be easily accessible and there are no transaction costs for moving money into and out of accounts. There is also no minimum or maximum deposit, and no subscription fees. All monies are also subject to regulatory safeguarding rules, which means they will be secured in a separate, segregated account.
Victor Trokoudes, Founder and CEO of Plum, said, “Many high street banks have been failing their customers on interest rates, leaving hard-earned money sitting idle and eroded by inflation.
While it’s positive we’re seeing some banks and building societies stepping up to provide seemingly competitive rates, they’re often temporary offers that are quickly withdrawn or require people to lock away their money for longer periods. And many high street banks still only offer rates that are less than half the base rate, which is appalling. Meanwhile, larger banks are happy to ramp up the cost of lending when everyone’s finances are under immense pressure.
“It’s time to shake up the industry and offer an alternative for cash holdings. People don’t have to accept the same old from traditional banks that don’t have their best interests at heart. At Plum, we’re going to provide our customers with an account that generates returns close to the BoE rates.
And they won’t have to face the typical withdrawal or deposit restrictions that are often included with high-interest savings accounts. People have worked hard for their money so their money should work harder for them, and we’re committed at Plum to supporting this with the best options out there”.
Plum has partnered with one of the world’s preeminent asset management firms, BlackRock, who are providing the money market fund that supports Plum Interest.
“The product is based on a type of highly liquid money market fund that is broadly considered the safest of its kind. That’s because it invests fully in short-term assets issued and guaranteed by the Government.
Money market funds had been traditionally used by pension funds, large corporations and wealthy individuals to park their money and protect their money against inflation, while also being able to access their money more quickly thanks to these funds’ higher liquidity.
Victor added, “Money market funds shouldn’t be just the preserve of the few who can afford to access them, so we’re making it easier for people to benefit from them. They’re already a mainstream option for people to park their money and avoid low savings rates in the US. That’s because more people are recognising the added safety that comes with assets fully guaranteed by governments.
“With our Plum Interest product, you won’t have to worry about constantly switching banks to get a higher rate as the product tends to track changes in the central bank base rate. We’re bringing this revolutionary cash management option to our customers so they can diversify where they hold their money.”