Martin Lewis warns on digital banking– are savings apps like Plum and Chip safe? | Personal Finance | Finance
Martin Lewis, 48, regularly provides advice on the best banking options available but today he was queried on some of the newer options to hit the market. Digital banking accounts are becoming increasingly popular but the Money Savings Expert expressed a certain amount of caution on using them.
On This Morning, Martin was asked if these digital apps are a safe place to put ones money, with a specific focus on Plum.
Martin responded: “Plum you don’t have financial services compensation with, but it ring-fences the money with an E-money provider, so effectively the money you put in is safe.”
However, Martin went on to highlight that: “You don’t get paid interest, it’s an investment app.
““But yeah, Plum and Chip and the others, they generally have some form of protection.
READ MORE: Martin Lewis warning: NS&I cuts ‘foreshadowing’ negative rates
As he detailed: “I think if you can fix and you want to fix, I’d fix now.
“If you want easy access I’d wait until the 24th of November until NS&I drops [rates]”.
Ian Ackerley, the CEO at NS&I, acknowledged the unfortunate news with the following comments as the cuts were announced: “Reducing interest rates is always a difficult decision.
“In April we cancelled interest rate reductions announced in February and scheduled for 1 May.
“Given successive reductions in the Bank of England base rate in March, and subsequent reductions in interest rates by other providers, several of our products have become ‘best buy’ and we have experienced extremely high demand as a consequence.
“It is important that we strike a balance between the interests of savers, taxpayers and the broader financial services sector; and it is time for NS&I to return to a more normal competitive position for our products.”
The UK and much of the world is in a low interest rate environment given that central banks are keeping base rates unprecedentedly low.
Currently, the Bank of England’s base rate is 0.01 percent and the next update on it will occur on November.
Some commentators, including Martin Lewis, fear that the UK may enter a negative interest rate environment in the coming months.
This could be more likely than some may think given that Andrew Bailey, the Governor of the Bank of England, recently confirmed to the Treasury Select Committee that negative rates is in the “toolbox”.
As Mr Bailey confirmed in early September: “It’s in the box of tools – we’re not planning it at the moment.
“We’ve got no plans to use it imminently, but it is in the box.
“If it was the right thing to do, then the case for bringing it out of the box would be strong.”