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A new market-topping savings account has been launched, paying 8 per cent interest which could earn £129.87 across a full year.
The Tembo account is a regular saver, which allows customers to put away a set amount each month, encouraging saving habits and helping to build a chunky pot of cash across the course of 12 months.
Santander launched a similar saver with the same rate earlier in the year, while Chase recently put their 6.5 per cent saver on the market to some acclaim – but the Tembo offering might top both given its flexibility.
The new launch from Tembo allows a maximum of £250 to be saved each month, which is £50 higher than Santander’s limit and £50 lower than Chase’s.
If you max that amount out each month, don’t make withdrawals and pay in on the first day of each month after you start, you’ll finish with £3,000 of your own cash plus £129.87 in interest. In comparison, maxing out the other two would see you get £125.53 interest from Chase and £104 from Santander.
While interest payments are made monthly, they are only at a lower 3 per cent rate – the additional 5 per cent is a bonus which is paid at the end of the full year term.
The bonus is also only available to new customers, which might be a blow for some, but for those who are considering opening a new savings rate there are other aspects of the Tembo account which may be appealing.
For starters, withdrawals are allowed, which isn’t the case with many regular saver, making it suitable for those building a first emergency savings pot, though of course taking money out of the account will alter the amount of interest you earn.
In addition, you don’t need to open a current account to access the regular saver, which is a requirement with some banks. In this case, the Tembo app is the gateway to opening the 8 per cent option.
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For those who cannot save the full amount each month, you can start with £10 via a bank payment or, £25 by setting up a direct debit.
Among other regular saver accounts on the market, only first direct offers one which can earn more interest across the year than Tembo’s, with a 7 per cent rate on offer for up to £300 a month – but money cannot be accessed from this account during the 12-month term. That account would yield £136.50 in interest after a year, maxed out.
Because money is put into regular saver accounts on a monthly basis, rather than a full amount at the start of the year, the headline interest rate does not translate to the interest earned over 12 months. Only cash put in at the start earns 8 per cent for a full year; the second month’s payment earns it for 11 months, the third month’s payment for ten months, and so on.
“Our new regular saver offers a market-leading 8 per cent rate, without requiring customers to move banks or open additional accounts. And with the flexibility to access their money whenever they need it, we’re making it easier for people to build their savings without compromising on the things that matter to them. At a time when every pound counts, we believe savers deserve better returns without unnecessary complexity.” said Richard Dana, CEO of Tembo.
The new account is launched on the day John Healey is expected to reverse changes to cash ISAs, scrapping the cut to a £12,000 annual limit.
