Active Savings – Hargreaves Lansdown’s new product – is aimed at “time-poor” savers. So should you sign up?
My last attempt to open a high-interest savings account was thwarted by my failure to go into the branch brandishing proof of identity within the allocated 90-day period. Thankfully, there are now services which promise to make it easier for “time-poor” people, or indeed serial procrastinators, to move money between saving accounts.
Hargreaves Lansdown’s Active Savings service was launched last September. The fund supermarket is already the biggest investment platform in the UK, and it is clearly aiming to persuade people to manage their cash savings through them as well.
The service acts as an account aggregator for people with spare cash who want to spread it across different fixed-term savings accounts, but who can’t face the hassle of setting up accounts at each bank. You get a centralised account from which to manage multiple saving accounts, without having to open, close and transfer money between banks. Customers must put in a minimum of £1,000 into their account, or “cash hub”. You can make a deposit either from your debit card, or, if you’re an existing customer, by moving across uninvested cash from your investment account. Although investment clients pay a charge of 0.45% of their assets to use the Hargreaves Lansdown platform, this charge won’t apply to Active Savings customers. Instead, banks will pay an annual commission to the company of 0.25% of balances held. As a result, you may get a slightly lower interest rate than if you’d gone to the bank directly.
The accounts on offer range from an easy-access account from Coventry Building Society which pays 1.25% to a five-year fixed-rate account from Close Brothers offering 2.55%. On the open market, the best rates you can get on an easy-access account are 1.5% from Marcus (the online bank arm of Goldman Sachs), or 1.46% from Tesco Bank. You can also get a 2.6% on a five-year fixed-rate account from Secure Trust Bank. Note, too, that with this Hargreaves Lansdown account you won’t get access to banks’ “teaser rates”, high rates that drop after a certain period.
Being lazy costs money Ultimately, Active Savings is a service for people who lack the inclination to do the administrative work necessary to get the very best rates, but who still want to make some money on their savings. The trouble is that not only may the rates be a little lower than on the open market, but HL doesn’t offer access to every product on the market either. These savings hubs may become more competitive and broaden their range if other banks and investment platforms launch their own versions. For now, however, having the initiative to do your own research remains a better bet.