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Goldman Sachs’ Marcus raises savings rates again: Is it worth considering?

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Digital challenger Marcus has increased the rates offering on its savings products. How do they stack up against the competition?

Marcus by Goldman Sachs has increased the savings rates on its trio of products: Online Savings Account, Cash ISA, and 1 Year Fixed Rate Saver.

The increases are as follows:

  • Online Savings Accounts: Rise from 2% AER/1.99% gross (variable), to 2.5% AER/2.47% gross (variable) including a 12-month fixed-rate bonus of 0.25% gross.
  • Cash ISA: Rise from 2% AER/1.99% tax-free (variable) to 2.5% AER/2.47% tax-free (variable) including a 12-month fixed-rate bonus of 0.25% tax-free. It doesn’t allow existing ISA transfers and it isn’t a flexible ISA so whatever you take out can’t be replaced within your tax-free allowance.

These will be automatically applied to existing customers from today “as this is a change to the underlying variable rate”, Marcus said.

  • 1 Year Fixed Rate Saver: Rise from 2.7% AER/gross (fixed) to 3% AER/gross (fixed) for new customers who open an account on or after 1 November 2022.

All three products have a minimum deposit requirement of £1 and the maximum that can be saved is £250,000, though savers should be mindful of the £85,000 Financial Services Compensation Scheme which protects the first £85,000 of the total balance held, as well as the ISA allowance of £20,000.

Marcus said: “We’re pleased to have increased our interest rates and continue to provide competitive offerings that reflect ongoing increases to the Bank of England Base Rate and other market changes.”

How good are the hikes?

This is the second Marcus rate hike in just two weeks and while the rates have jumped a fair bit, it still doesn’t make them market-leading, though it is in joint first place in the cash ISA tables.

Currently, the top-paying easy access rate is offered from Al Rayan Bank which pays an expected profit rate of 2.81% AER/gross (minimum £5,000), according to Savings Champion data.

Marcus’ cash ISA offering joins Mansfield Building Society which also pays 2.5% AER/gross on its 180-day notice cash ISA. Meanwhile, the top paying one-year fixed rate bond pays 4.6% (RCI Bank), so at 3%, Marcus’ offering lags by some way.

At launch in September 2018, Marcus offered a market-leading rate of 1.5% on its easy access account and it was consistently in the top tables, attracting hundreds of thousands of rate-starved savers.

However, since then, new challengers and competitors have pipped it to the top spot. On the plus side, the rate hikes are updated automatically, though savers may wish to turn their attention elsewhere if purely chasing top rates.

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