Laura Suter, head of personal finance at AJ Bell, comments on the new digital bank being launched by Chase:
“The last US banking giant to venture into the UK retail banking market was Goldman Sachs with Marcus three years ago, and it sparked a shake-up of the savings market and a rates war that benefitted savers – which means many will have high hopes for this new offering from across the pond.
“First impressions are that this new account will blow the competition out of the water, with an attractive cashback deal and a market-beating interest rate on its savings feature. The 1% cashback is better than rivals as it’s on spending, rather than just certain bills or direct debits, and it also doesn’t require a minimum monthly deposit or come with a fee. Assuming the cashback is uncapped, the rate means that if someone spends £500 a month on their debit card they’ll get £5 back. What makes it more attractive to some is that they don’t need to switch accounts to get the offer.
“A cash round-up feature has become fairly commonplace with banks now, and it means each transaction is rounded up to the nearest pound, with the difference siphoned off into a savings account. But the fact that Chase is paying 5% interest on its round-up savings makes it very attractive. The top rate you can get from other banks paying interest on their round-up feature is 0.25%, meaning the new Chase rate leapfrogs those offerings. However, if the savings rate is only offered on the amounts saved by round-ups and you can’t add funds to it, it will be paid on a relatively small sum. It’s still attractive for those who want to get into the savings habit and earn some interest at the same time.
“There will be some drawbacks for the account for some customers, as it doesn’t have any bank branches, all the help and customer support is online or on the phone, and it must be run from an app. What’s more, some people might be wary of the name as it’s new to the UK market, although has a long history in the US.”