Savers can now take advantage of a new savings product launched by the British challenger bank Tally. The ‘first of its kind’ savings account offers a 2% fixed rate yield among the best in the market for deposits between £ 1,000 and £ 20,000.
How does the account and the company work?
Tally explained that unlike traditional banks, her clients’ savings are never loaned, tapped or invested, meaning there is no bank loan risk for clients. Plus, because his deposits aren’t used to create more money by taking out new loans, he claims this is also the very first bank account that doesn’t contribute to inflation.
The company went on to explain how its unique setup removes much of the hidden risks associated with holding money in a traditional bank account in fiat currency. This includes the risk of expropriation, that is, when a bank has financial problems, it can take a percentage of its customers’ savings in exchange for new shares in the bank. Tally noted that “even the FSCS does not protect you from this”.
Tally continued, “In fact, the only risk that the Daily Tally Account does not bypass is fluctuating exchange rates. Because Tally is a currency that represents the physical property of gold, when measured in money. fiduciary (for example, the pound sterling), it fluctuates according to the price of gold.
“But the value of gold has historically been found to increase over time when measured in fiat currency. For example, the value of sterling has halved against gold over the past six years. last years.”
To “get around” short-term currency fluctuations for clients, Tally has launched a one-year fixed rate savings account that offers a guaranteed return of 2% in GBP.
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Based on research data from Charter Savings Bank and data from MoneySavingExpert, Tally said there is “no bank or savings provider in the UK” that offers a fixed rate higher than one. year. The closest competitor is Zopa, which currently offers 1.35%, while Marcus of Goldman Sachs is at the bottom of the table with 0.5%.
Cameron Parry, CEO and Founder of Tally, commented on the launch.
“Our new 2% fixed rate one-year savings account offers unmatched returns, beating any other one-year term deposit currently on the market,” he said.
“Saving with traditional banks comes at the expense of the customer, who receives a tiny amount of interest compared to the profit the bank makes by exploiting the customer’s savings. Customers who also bear all the risks (often without their knowledge) in the event of default on the bank’s loans.
“With inflation far exceeding the low rates offered by the big banks, people are desperately looking for solutions that offer value, security and an alternative to this fiat money trap (issued by the government).
“This product, and the Tally banking system in general, was designed to give savers a chance to fight rapidly rising inflation and financial volatility. And unlike traditional banks, our clients’ deposits are not loaned, increased or invested, which makes saving with us more secure. “
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How to open the account
Mr Parry argued that the “historic” banking system undermines any savings advantage, while Tally’s new account offers security and transparency to savers while introducing them to a “better money system”.
The new savings product is available through the Tally app for Tally customers only. Non-customers will need to download the Tally app and complete the onboarding process to open a daily account.
Once they have paid their one-time Tally membership fee (£ 20), they can apply for a fixed rate savings account when the waiting list opens. Customers can pay between £ 1,000 and £ 20,000 and positions are allocated on a first come, first served basis.
Mr. Parry concluded: “The government is always talking about upgrading, but when it comes to savers, the banking system in place is designed to protect and benefit the bank, not the customer. People need an alternative, which is why we built Tally.
“Saving money that retains its value over time and protects customer assets at all times is fundamental to an individual’s financial well-being.
“Our market-leading one-year fixed rate product makes fixed rate savings more rewarding and also introduces clients to the benefits of Tally’s non-fiat banking system. We are launching this product to test the appetite of bank customers for better returns and better protections when it comes to their money.
Inflation and interest rates
Savers will want to take advantage of these types of offers where they can, as inflation continues to exceed average rates. Yesterday, ONS detailed inflation, as measured by the CPI, hit 4.2%. This is more than double the Bank of England’s 2% target.
For comparison, Moneyfacts’ most recent rate analysis showed the average no-notice savings rate to be 0.1918% on November 12. This is the lowest since at least January 2016.
Additionally, Moneyfacts noted that there was “not a single standard savings account that could exceed 4.2%.” These problems could also be compounded by the fact that inflation could rise further in the coming months.
At the end of October, Huw Pill, chief economist and executive director of monetary analysis and research at the Bank of England, warned that inflation is expected to rise “near or even slightly above five percent” in early 2022.
While this is disheartening for savers, many expect the Bank of England to have no choice but to raise rates in the coming months as inflation continues to hit consumers. Indeed, in recent months, many Bank of England policymakers have hinted that rate hikes may be underway and Vasso Ioannidou, a finance professor at Bayes Business School, has said rate hikes are likely. .
“Based on the latest figures, the inflation rate of 4.2% is more than twice as high as the Bank of England (BoE) target rate,” she said.
“It is significant that it is expected to rise further over the next few months, so it is inevitable that the BoE will have to raise interest rates and do so very soon.
“Rising inflation means a loss of purchasing power, as buyers can afford fewer goods or services with the same amount of money. The loss in the real value of disposable income, currently projected at around seven percent, combined with tax increases, is significant.
“The current increase is largely due to rising fuel costs and double-digit increases in energy prices. This affects low-income households more, as transportation and heating expenses typically represent a larger fraction of their budget. “