Get 1% cashback and 5% on your savings! There is a catch, though
Finance: Expert on impact of inflation on savings accounts
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JP Morgan owns the largest consumer bank in the US used by more than 60 million households and wants to be a big hit over here, too. Its current account Chase is now launching in the UK and is stuffed with benefits and rewards. You don’t even have to quit your existing bank to benefit.
Chase is a fee-free current account that combines cashback rewards on your everyday debit card spending, plus interest on your savings.
Customers can also use their debit card overseas without paying a fee, including for cash withdrawals. Most banks slap on extra charges when using cards abroad.
The new account is only available as an app from chase.co.uk, but it does offer UK-based customer support.
Sarah Coles, personal finance analyst at Hargreaves Lansdown, said Chase has “an awful lot going for it”.
Unlike many current accounts, you do not need to dump your existing bank, pay in a regular monthly sum or set up direct debits.
Coles said: “Chase offers 1 percent cashback on all your purchases, which is streets ahead of the competition, especially since it is not capped.”
So if you put all your spending on the account and it totalled £10,000 over a year, you would get £100 back.
Coles said there is one big downside, though. “You only benefit for the first 12 months after opening your account.”
Chase also has an attractive headline savings rate, Coles added. “You can round up your spending to the nearest £1, and that money will automatically go into a separate pot, which pays 5 percent.”
This is great for building an accidental savings habit, Coles said. “It pays more than NatWest Digital Saver’s 3.4 percent, which is the best regular savings account linked to a current account.”
Once again, there’s a catch. That rate lasts for just one year.
If you are still tempted, you should also check out Nationwide FlexDirect, Coles said. “It pays 2 percent for 12 months on everything in your current account up to £1,500, whereas Chase only pays interest on its round-up account.”
Nationwide also offers a £100 bonus for new switchers but you must switch your existing account and transfer at least two active direct debits.
Chase does not offer an overdraft, Coles said. “First Direct is good here, charging zero interest on the first £250.”
Britons are notoriously slow to switch bank and new entrants have found it difficult to make a profit when everyone expects free banking, but JP Morgan has the scale and commitment to succeed, Coles added.
As with every UK-registered bank, the first £85,000 of your money will be protected by the Financial Services Compensation Scheme.
Another US banking giant, Goldman Sachs, entered the savings market three years ago offering a market-beating 1.5 percent with easy access on its Marcus account.
Anna Bowes, co-founder of SavingsChampion.co.uk, said this proved so popular it was swamped with money from savers and forced to cut rates.
Today Marcus pays a solid but unspectacular 0.5 per cent, which is inflated by a 12-month bonus of 0.1 percent.
Bowes said Chase’s round-up savings rate risks being small change. “The publicity Chase gets will be far greater than the interest its customers earn.”
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