JPMorgan’s digital bank, Chase, has launched a new savings account in the UK with a 1.5% rate, outpacing competitors on the high street offering better deals to customers following the Bank’s rate hikes from England.
British savers are under pressure as inflation hit a 30-year high of 6.2% last month, with a further rise expected in April when regulated energy prices are expected to rise and war in Ukraine raises concerns about the cost of fuel and other raw materials.
“With the cost of living rising, we know consumers want to maximize the interest they can earn with the reassurance of having instant access to their savings,” said Shaun Port, Managing Director of Chase in the UK. United for savings and investments.
Chase’s new Easy Access Account, which is linked to a digital banking current account, will allow savers to deposit up to £250,000 in total, accessible at any time. Clients can open up to 10 separate savings accounts.
“This is clearly a carrot from digital banking to try and drive new current account openings and in today’s market I expect it to be overwhelmed with applications,” said said Andrew Hagger, personal finance editor at Moneycomms.co.uk.
Other lenders are expected to raise rates on their savings accounts next month, but not at the same rate. The rate on Lloyds Bank and NatWest instant savings accounts will drop from 0.01% to 0.1%, although other products have seen bigger increases.
While Chase doesn’t have a minimum income requirement for a checking account, it does require smartphone access and doesn’t currently offer joint accounts, Hagger said, potentially limiting some customers.
“Let’s just hope the rate is more of a short-term incentive that will then be reduced a few months later,” he said.
JPMorgan launched Chase in the UK retail market last year, its first overseas retail bank in the company’s 222-year history, a development from Goldman Sachs’ decision to launch the big bank public Marcus in 2018. At launch, Chase initially only offered checking accounts. with a rewards program.
The UK retail market has been an attractive test bed for US banks looking to expand their digital offerings, with its strong fintech scene and well-established payments infrastructure. Open Banking standards, which are supposed to give customers more control over their data, theoretically allow them to switch banks more easily.
This month the FT reported that the decision to launch Chase in competition with digital players such as Revolut, Monzo, Starling and a range of high street brands has raised questions, at a time when rivals such as Citigroup reduce their international operations.
Efforts by major banks to launch digital brands have had mixed success. JPMorgan’s first effort, US bank Finn, closed after a year. NatWest’s national digital bank, Bó, was shut down in 2020, lasting less than six months.
Inflation is now expected to spike to 8% by the end of June, fueling fears of the impact on the cost of living. Earlier this month, the Bank of England raised its main interest rate from 0.5% to 0.75%.
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