How to choose the best savings platform: Should you use one or dodge the middleman?

Savers are enjoying the highest interest rates in 15 years – but getting the best deals involves time and legwork. 

The top rates are changing rapidly as banks and building societies compete for customers’ deposits, while cash left in old accounts often ends up on poor rates.

Savings platforms present themselves as a solution to this problem. These are websites where you hold several savings accounts in one place.

Instead of having to deal with the logins and paperwork for each, you can hold savings accounts with a number of banks and building societies accessible through one portal.

All your eggs in one basket: So should you entrust your savings to a platform – or cut out the middleman and open accounts directly with banks and building societies?

All your eggs in one basket: So should you entrust your savings to a platform – or cut out the middleman and open accounts directly with banks and building societies?

Earlier this month, over-50s specialist Saga launched its own savings platform. It lets customers hold accounts with more than 20 savings providers. 

Other major platforms include AJ Bell Cash Savings Hub, Aviva Save, Flagstone, Hargreaves Lansdown Active Savings, Interactive Investor Cash Savings and Raisin.

So should you entrust your savings to a platform – or cut out the middleman and open accounts directly with banks and building societies?

What type of cash saver are these platforms good for?

If you have a small savings pot held with one provider, you are unlikely to need a platform. 

But if you have a larger amount you would like to split between easy access and longer-term accounts, Individual Savings Accounts (Isas) and traditional savings accounts, a platform could be useful.

Anna Bowes, co-founder of rate monitor Savings Champion, says: ‘These savers don’t have the time or energy to keep monitoring accounts, then switching and splitting money between providers to improve the rates they’re getting.’

Platforms reduce the stress of managing your savings as they usually remind you when your accounts mature, helping to ensure your savings don’t languish in low-paying accounts. 

They also provide annual statements giving a full overview of your accounts – considerably less paperwork than receiving one statement for each.

But the biggest advantage is for savers with very large deposits. 

That is because the first £85,000 of your savings with any one bank or building society is protected if it goes bust, as long as it is covered by the Financial Services Compensation Scheme (FSCS) – as most are. 

So if you have more than this amount it makes sense to spread it out among providers to ensure your balance with any one does not exceed £85,000.

James Hyde, at rates scrutineer Moneyfacts, says platforms are safe and secure, as they have bank-level security and FSCS protection. 

However, if something does go wrong, savers who use platforms may have to wait longer for their cash to be returned. ‘If a bank goes bust, the FSCS can take three months to pay out, rather than seven days,’ says Hyde.

Will you still benefit from the best deals?

There are usually no fees for using these platforms, but the provider receives a share of the interest from the partner banks.

This can mean the rates on offer are lower than if you went direct to a bank or building society.

For example, a saver opening a 12-month fixed-rate saver from SmartSave on Saga’s platform earns 5.69 per cent annual interest, rather than 5.87 per cent if they went direct. 

That is £36 a year less on a deposit of £20,000. But sometimes platforms offer exclusive rates that are better than going direct. 

For example, Raisin offers the Paragon Easy Access account exclusively at 4.7 per cent. Open the same account direct with Paragon and you would earn just 2 per cent.

How should you choose a savings platform?

Though savings platforms operate in similar ways, their offers vary. You need to work out what matters to you. 

Often the number of accounts available differs. Flagstone customers can open accounts with more than 50 partner banks, but with Aviva Save just six providers are available.

While all platforms offer fixed-rate accounts, not all work with easy-access accounts. For example, Interactive Investor only offers fixed-rate deals – currently with a minimum term of six months.

Hargreaves Lansdown Active Savings does have an easy-access account from Zopa at 4.66 per cent, but the best easy-access rate outside a platform is 6.25 per cent from Leeds Building Society.

No single provider will always beat the rest

Platforms are always vying to offer the best rates. At any one time, some will be offering exclusive deals, or bonuses.

For example, Raisin offers the best two-year fixed-rate account at 5.88 per cent from Turkish bank Ziraat, while AJ Bell offers the best one-year fix – 5.9 per cent from Gatehouse Bank. But all this is likely to change in days as new deals are launched and withdrawn.

It may be tempting to open accounts with several platforms to get the best rates, but this removes the ease and convenience that platforms seek to offer. 

You may be better off picking one platform and then going direct to savings providers should you spot exceptional deals it doesn’t offer.

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