Digital challenger bank, Tandem, has launched its first ever savings accounts. It has started with three competitive fixed-rate account with an easy-access deal in the pipeline.
The range includes 1.8 per cent interest on a one-year fixed saver and near best-buy rates of 2.1 per cent on its year fixed saver and 2.3 per cent over three years, all accessed through its mobile app only.
The accounts have been eagerly awaited since the bank acquired Harrods bank last year.
Would you bank by mobile for a better savings rate? Tandem offers competitive rates but you can only sign up using its mobile app
What is Tandem?
Tandem is a relatively new bank aiming to offer mobile banking through its purpose-built app. Savers with Tandem are covered under the Financial Services Compensation Scheme up to the usual £85,000 limit if the bank runs into trouble.
Similarly to rivals Monzo and Starling it offers special spending breakdowns via its smartphone app to help customers manage their money.
Tandem also lets you link existing current accounts through the app and pull in information from other banks. The app then allows you to set budgets, see where your money is going and get balance projections based on your regular bills and spending habits.
However unlike its app-bank competitors, it has focused on launching with a credit card and savings accounts putting it head-to-head with the likes of more established savings challengers such as Atom, Ikano Bank and Ford Money.
Tandem first launched in 2016 having secured a banking licence the year before, but its plans were put on hold after its House of Fraser owner, China Sanpower Group, was prevented from investing in the bank further by the Chinese government.
Tandem then acquired Harrods bank and launched its first credit card offering cashback on every purchase and no exchange fees when spending abroad.
The bank says it plans to launch a second credit card and an easy-access savings account in the future.
David Goodwin, product manager at Tandem, says: ‘We’re shaping a suite of products that serve as solutions to real problems that people struggle with every day. Tandem is a bank that helps customers better manage their money, and these savings accounts are a way for people to see guaranteed returns on their cash.’
Ricky Knox, Tandem’s chief executive adds: ‘It’s been a long wait for us and we’re excited to finally share these accounts with the public. We’ve got big ambitions for 2018 and are off to a fantastic start.’
So how do its new rates compare?
Tandem’s new account line up all require a minimum £1,000, up to a maximum £2.5million. Remember though, the FSCS protection only covers the first £85,000.
You can only make one deposit into your account, within the first 14 days, and interest is paid annually.
One thing to bear in mind, you won’t be able to withdraw funds until the end of the one, two or three-year terms.
There are a few app-only banks already offering savings accounts, many of which sit at the top of This is Money’s best-buy savings tables.
Anna Bowes, director of independent savings advice site Savings Champion, said: ‘Tandem Bank is entering the savings market with a bang. This is good news for savers as more competition will normally lead to increased rates.
‘And over three years Tandem’s 2.3 per cent rate is beaten by only 0.01 per cent as RCI Bank is paying 2.31 per cent. But it is worth noting that RCI Bank is not part of the UK FSCS– instead deposits of up to €100,000 are protected by the French Deposit Protection Scheme.’
The bank’s one-year deal paying 1.8 per cent is again beaten by a small margin, Al Rayan Bank and Wyelands Bank currently offer a rate of 1.85 per cent. Wyelands Bank requires a higher deposit however at £5,000.
Milestone Savings pays slightly less than the market leaders at 1.82 per cent, but still beats Tandem by a 0.2 percentage point margin.
This is Money’s verdict
While the bank may be relatively unknown, Tandem has full FSCS protection.
However, one factor which may mean its accounts don’t appeal to all, you can only open an account via the bank’s smartphone app, online or over the phone. The bank has no physical branches.
It has long been the case that the challenger banks have dominated the best-buy tables, while the big banks show little interest in savers cash, offering rates as low as 0.1 per cent.
The extra competition has been good news for savers during a time of rock-bottom rates.
New providers generally prefer to start with fixed-rate accounts knowing they will keep hold of saver’s deposits for a set period of time which allows them to lend against it.
However, it’s good news the bank intends on extending its range to include an easy access account in the future as the more contenders looking to offer the most eye-catching rates the better.
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