Marcus by Goldman Sachs, a new online bank, launched in the UK today with a table-topping instant-access savings account – but is it worth the hype?
This new player in the savings market comes as Which? research shows many UK banks are failing to pass on the recent base rate rise to savings accounts.
Which? looks into what the bank is offering, and whether this account could spell good news for your savings.
What is Marcus by Goldman Sachs?
Named after Marcus Goldman, one of the original founders of US investment bank Goldman Sachs, Marcus is a totally new addition to the UK banking industry – though it has been available in the US since 2016.
In the UK, it’s launched with an instant-access savings account, though the US arm offers a range of savings accounts and personal loans.
Goldman Sach’s reputation suffered from its association with the sub-prime mortgage crisis and the 2008 economic crash.
Marcus pits itself as a more customer-centred, hi-tech, transparent company. As part of this, much is made out of the account offering UK-based telephone support, and a totally fee-free service – but will it be enough to make people forget the bank’s past? Only time will tell.
How does the instant-access account measure up?
The Marcus account offers 1.5% AER variable on savings between £1 and £250,000. This includes a 12-month bonus rate of 0.15%, meaning that after a year the AER will drop to 1.35%.
It must be opened and managed online, and there’s no notice term, no withdrawal restrictions and no fees. Savings are covered by FSCS protection.
But how does it compare to other top-rate instant-access accounts? The table below shows the current top five.
|Marcus by Goldman Sachs easy-access savings account||1.5%||£1 minimum initial deposit. 0.15% 12-month bonus rate.|
|Yorkshire Building Society Single Access Saver||1.41%||£100 minimum initial deposit. Only one withdrawal per year.|
|Kent Reliance Easy Access Account||1.37%||£1,000 minimum initial deposit. Balances lower than that will receive 0.1% AER.|
|AA Easy Saver||1.36%||£100 minimum initial deposit, AER drops to 0.2% after 12 months.|
|Bank of Cyprus UK Online Easy Access Account||1.36%||£1 minimum initial deposit, AER drops to 1% after 12 months.|
Source: Which? Money Compare. Correct September 2018.
While the rate offered by Marcus is not enough to beat the current rate of inflation, it is comfortably the highest rate in the instant-access market and is free of the restrictions other top-paying accounts currently offer.
For instance, the second-highest rate offered by the Yorkshire Building Society Single Access Saver is only available if you limit yourself to one withdrawal a year, which won’t work if you want more frequent access to your cash.
The next highest rate is offered by Kent Reliance, but to benefit from the rate you have to make a minimum initial deposit of £1,000, which may be out of reach for some people.
After the first year, the rate on the Marcus account drops to 1.35% AER after a year. This is considerably higher than the rates the AA Easy Saver and Bank Of Cyprus UK Online Easy Access Account revert to, though it’s worth shopping around at that point to see what is available at the time.
It’s also much higher than the current average rate of 0.6% AER across all instant-access accounts (according to Moneyfacts).
So, compared to other instant-access accounts, it seems that Marcus does offer a pretty good deal.
The Which? Money Compare comparison tables let you search hundreds of savings and Isa accounts for help finding the best account for you.
Can anywhere beat this interest rate?
Several other accounts can beat this rate, but none offer such easy access to your cash.
The table below shows the top rates offered by other types of savings accounts.
|Charter Savings Bank 5 Year Fixed Rate Bond||2.70%||£1,000 minimum initial deposit. No withdrawals during term of the bond.|
|Masthaven 48 Month Flexible Term Saver||2.52%||£500 minimum initial deposit. No withdrawals during term of the bond.|
|Charter Savings Bank 3 Year Fixed Rate Bond||2.41%||£1,000 minimum initial deposit. No withdrawals during term of the bond.|
|Al Rayan Bank 24 Month Fixed Term Deposit||2.30% (EPR*)||£1,000 minimum initial deposit. No withdrawals during term of the bond.|
|My Community Bank 12 Months Fixed Term Deposits||2.10%||£1,000 minimum initial deposit. Withdrawals only considered under exceptional circumstances with no interest payment.|
|PCF Bank Limited 180 Day Notice Deposit||1.85%||£1,000 minimum initial deposit. Must give 180 days’ notice to withdraw.|
|OakNorth 90 Day Notice Deposit Account||1.77%||£1,000 minimum initial deposit. Must give 90 days’ notice to withdraw.|
|Kent Reliance 60 Day Notice Account||1.50%||£1,000 minimum initial deposit. Must give 60 days’ notice to withdraw.|
|Charter Savings Bank 30 Day Notice||1.36%||£1,000 minimum initial deposit. Must give 30 days’ notice to withdraw.|
*Expected Profit Rate. Source: Which? Money Compare. Correct September 2018.
While all of the top fixed-rate bonds offer a higher AER than the Marcus account, bear in mind that you’ll have to relinquish access to the money saved in them for the full term of the bond.
As the table shows, the Marcus account equals or beats the rates offered by the top 30 and 60 days’ notice accounts, meaning your cash can grow by the same amount without the hassle of waiting to make a withdrawal.
What’s more, none of the top-rate accounts allow a minimum initial deposit of less than £500 – in fact, the majority require at least £1,000 to be saved in order to qualify. Many people will not be able to lock up this kind of sum, so you should bear this in mind before opening one of them.
Another thing to consider is the fact that often banks launch a top-rate deal that is then rapidly withdrawn at short notice once they’ve hit a certain number of subscribers.
Whether this will happen with Marcus – and whether customers will rate the service offered by this new bank – we’ll have to wait and see.
- Find out more: How to find the best savings account
Which? Limited is an Introducer Appointed Representative of Which? Financial Services Limited, which is authorised and regulated by the Financial Conduct Authority (FRN 527029). Which? Mortgage Advisers and Which? Money Compare are trading names of Which? Financial Services Limited.