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Blow for savers as Marcus shuts easy access account to new applicants

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10/06/2020
Savers have been dealt a fresh blow as Marcus announced it is pausing applications for its easy access account after being flooded with deposits.

Marcus, the online savings arm of Goldman Sachs, revealed it has been inundated with customers opening its easy access account in the past couple of months, as the product has typically held its place in the best buy tables.

In a bid to keep within a regulatory limit and to manage how quickly it grows, Marcus has paused applications for its easy access savings account.

A statement read: “This means that we can continue offering our existing easy access savers the competitive interest rates we want to provide.”

While it can’t say how long the suspension will last, Marcus said it hopes the account will be available in the coming months.

It added that for existing customers, everything will continue as normal. It is also offering a one-year fixed rate saver paying 1% for a year.

“We’re turning our attention to launching an app, to give our customers more ways to manage their money. At the same time, we’re looking to the future and working on exciting plans for the UK in the long term,” the statement added.

Marcus launched in September 2018 and to date, has 500,000 customers on its books and holds £21bn of deposits.

The temporary suspension comes as Marcus attempts to avoid breaching a regulatory banking limit. Once they reach £25bn, larger banks are subject to additional regulations, namely ring-fencing money away from riskier activities by the bank.

“It would mean Goldman Sachs would have to keep the money separate from its investment banking arm, so it couldn’t make as much money from deposits,” Sarah Coles, personal finance analyst at Hargreaves Lansdown explained.

Saga, which partners with Marcus to offer savings products, has not been affected. A Marcus spokesperson, said: “Saga products are offered through a long-term strategic partnership between Goldman Sachs and Saga and are separate to those offered through Marcus by Goldman Sachs. There are no immediate plans to remove the Saga accounts from the market.”

Where now for savers?

The top paying easy access account open to new customers is offered from NS&I – the government’s savings arm. Its income bond pays 1.16%

Savers able to tie up their money can get 1.25% (expected profit rate – EPR) from BLME or 1.31% EPR for an 18-month bond from Al Rayan. It is also offering a three-year fix with an EPR of 1.51% while BLME has an EPR of 1.41% on its two-year product.

Coles said: “The savings market has been engulfed by waves of cuts over the past few months, and Marcus’s easy access account has been washed ashore.

“These waves are self-perpetuating. The most competitive account attracts too much money, so the bank cuts back. This puts a new account in the frame, which attracts more money and then makes a cut, and so it continues. In the past two months we’ve seen the most competitive easy access accounts fall from around 1.3% to around 1%.”

She added that savers need to think about their savings as a whole.

“We need one-three months’ worth of expenses in a competitive easy access account in case of emergencies, but once you have this, it’s worth considering whether you can tie up some of your savings for longer, to secure a better rate and protect your cash from rate cuts.

“It’s not worth holding out for rising rates, because we’re actually expecting more cuts in the coming months. So, if you want to take advantage of fixed rates, it’s worth doing so sooner rather than later,” she said.

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