Savers are being offered a new market-leading savings rate as Zopa looks to enter the current account market.
The app-based challenger bank has launched a new current account called Biscuit and customers can unlock an attractive regular savings rate of 7.1%. It's currently one of the best regular savings rates on the market right now.
Current account holders can also earn 2% on all balances and 2% cashback on direct debit bills worth up to £1,500 per year.
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In total, users could earn £256 per year by combining interest and cashback, according to Zopa.
Plus, there are no fees on overseas spending.
The 7.1% rate provides a return above inflation and the Bank of England base rate, so how tasty is it?
How Zopa's Biscuit current account works
Zopa already offers fixed rate savings accounts that have in the past topped the best savings rates tables.
But you will need to open Zopa’s new Biscuit current account to access the exclusive Regular Saver rate of 7.1%.
You can then deposit up to £300 per month and assuming the rate stays the same, you could earn up to £137 per year.
The cashback on bills and interest on your total current account balance will also boost your earnings.
The account is available for UK residents who are 18 or older and it can be opened by downloading the Zopa Bank app onto your smartphone.
Is Zopa's Biscuit account any good?
The regular saver rate of 7.1% puts Zopa among the best buys.
First Direct and the Co-op offer 7% to current account holders on monthly contributions of up to £300 and £250 respectively.
However, Principality Building Society currently tops the best buys with a rate of 7.5%. It requires you to fix your cash for six months, and you can pay in up to £200 a month.
The Zopa account does at least let you contribute more than Principality but like many other regular savers, the rate is variable so could change at any point.
It is unclear how long the savings rate will stick around, especially if interest rates drop, as this could just be a way to attract new customers.
Additionally, you need to be tech-savvy and happy to manage your finances through an app.
Zopa Bank also isn’t part of the Current Account Switch Service so you would need to change any direct debits manually if you are planning to move more across.
But if you are happy to manage your money on a smartphone, this current account may be worth considering, especially if you can secure the 7.1% regular savings rate before it changes.
We explore whether regular savings accounts are worth it in another piece.
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