| Instant access | Cahoot | Cahoot Sunny Day Saver | 5% (a) | n/a | £1 | Internet | Monthly, yearly |
| Instant access cash Isa | RECOMMENDED_BADGE(RECOMMENDED PROVIDER); Charter Savings Bank | Easy Access Cash Isa | 4.26% | 82% | £1 | Internet | Monthly, anniversary |
| One-year fixed rate | Union Bank of India (UK) Ltd | Union Premier Bond | 5.12% | n/a | £1,000 | Internet | On maturity |
| One-year fixed rate cash Isa | Vanquis Bank | 1 Year Fixed Rate Cash Isa | 4.90% | n/a | £1,000 | Internet | Monthly, anniversary |
| Two-year fixed rate | DF Capital | 2 Year Fixed Deposit - Annual Interest | 5.15% | n/a | £1,000 | Internet | Yearly |
| Two-year fixed rate cash Isa | Vanquis Bank | 2 Year Fixed Rate Cash Isa | 5.02% | n/a | £1,000 | Internet | Monthly, anniversary |
| Three-year fixed rate | Thisbank | Fixed-Term Savings Account | 5.18% | n/a | £100 | Internet, mobile app | Yearly |
| Three-year fixed rate cash Isa | RECOMMENDED_BADGE(RECOMMENDED PROVIDER); Aldermore | 3 Year Fixed Rate Cash Isa | 5.03% | 74% | £1,000 | Internet | Monthly, anniversary |
| Four-year fixed rate | RECOMMENDED_BADGE(RECOMMENDED PROVIDER); Aldermore | 4 Year Fixed Rate Account | 5.17% | 74% | £1,000 | Internet | Monthly, yearly |
| Four-year fixed rate cash Isa | UBL UK | 4 Year Fixed Rate Cash Isa | 3.91% | n/a | £2,000 | Branch, internet, mobile app, postal | Monthly, quarterly, anniversary, on maturity |
| Five-year fixed rate | Vanquis Bank | 5 Year Fixed Rate Bond | 5.34% | n/a | £1,000 | Internet | Monthly, yearly |
| Five-year fixed rate cash Isa | Shawbrook Bank | 5 Year Fixed Rate Cash Isa | 5.25% | 65% | £1,000 | Internet | Monthly, anniversary |
Why do online or app-only accounts off more competitive rates? One simple explanation is that providing digital-only accounts costs less. Scrapping services at a physical branch mean they have fewer overheads, so they can afford to offer higher interest rates while still maintaining profit margins.
Find out more: 2. Easy to open and manage
The ease with which you can open and manage an account is one of the biggest selling points about digital banks.
Getting started is often as simple as downloading an app on your phone, entering your personal details, and passing a few security checks. Once up and running, you can view your account whenever and wherever you like.
You can set up real-time notifications so you know transfers into the account have safely arrived. Plus, some providers allow you to open multiple 'pots' depending on your savings goals.
Customers saving with Zopa, for example, can spread their nest egg across instant-access, fixed term, and cash Isas. And all of the accounts can be opened and managed in the same app.
3. Can help build a savings habit
Many digital banks offer features that automatically help you regularly put away small amounts of cash.
For example, Chase, Monzo, Revolut and Starling all offer to round up debit card or contactless payments to the nearest pound and sends the spare change to your savings account.
It works like this: buy something that costs £19.30 and it'll be rounded up to £20, with 70p put aside in savings. It may not sound like much but, if you’re doing this for every transaction, it can really start to add up.
Monzo also offers an automated version of what's called the 1p savings challenge. This involves putting away just 1p on the first day, then adding another penny to what you save each day. So, day two is 2p, day three is 3p, and so on. It means if you started on 1 January, the total amount saved by 31 December would be £667.95.
Cons
1. Limited or no branch access
While online and app-only rates may be higher, not everyone feels comfortable managing their money digitally. For older savers or those with limited internet access, high street branches offer face-to-face support and a sense of security that apps can’t always replicate.
Sadly choice of savings accounts that can be opened and managed in a physical branch is dwindling fast as more providers focus on digital banking services.
2. You may need to double-check protection
This protects up to £120,000 of a saver's pot if a bank or building society goes bust. App or online brands have to abide by the same rules and regulations as other providers, but not all of them are FSCS protected.
For example, while the likes of Starling, Zopa, and Revolut have banking licences in the UK, some companies, such as Chip, do not.
Instead these 'money apps' are authorised and regulated by the Financial Conduct Authority (FCA) and use partner banks to hold your money. It means cash is kept separate from the provider's own funds and ring-fenced, so they cannot use them whatsoever.
So long as these third-party banks are covered by the Financial Services Compensation Scheme (FSCS), your savings should benefit from the same protections as if you deposited your money directly into any UK bank.
3. Risk of IT outages
As banking becomes increasingly digital, the risk of IT outages caused by faulty software or even cyberattacks is growing.
If you are worried an IT meltdown could prevent you accessing your savings in an emergency, then there are couple of steps you can take.
Stashing a portion of your nest egg in an account with a different provider means you have an alternative pot to dip into should you get locked out of your main one.
Plus, a credit card is a good option for making any urgent payments. Just make sure you pay off the entire balance each month to avoid incurring interest.
Find out more:
source https://www.which.co.uk/news/article/can-a-savings-app-help-you-save-more-6-pros-and-cons-of-going-digital-ajMdR3P47zCc
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