The new rate will be payable on balances of up to £5,000 from 1 October 2023, and it will be available to new and existing customers. For joint accounts the balance is £10,000. Interest will be paid monthly.
The £5,000 is inclusive of money held in ‘Spaces’ and children’s debit cards connected to adult accounts.
Nice perk for anyone using Starling already.
Only months too late lol
Most banks pay no interest on your current account balance and never have. Monzo is about to take it away including for normal pots.
Now that’s more like it. Just a shame it’s taken them this long to react to the market. Slower than the incumbents.
The new profile pic
Starling never offered savings accounts until recently and remember they only offered a fixed saver.
Also worth mentioning Starling used to offer account interest at a decent rate relative to the BoE rate until they slashed it to 0.05%
Starling isn’t going to last very long if they offer high interest rates. It makes sense that they haven’t done this before. I’m surprised they’ve even done this now but I presume they’ve been forced to for whatever reason.
That 0.05% is still higher than most banks though. I got nothing when I was with Santander.
I could have sworn the biggest touted benefit of fintechs from all the founders in the early days was far lower overheads on a per account basis, meaning they could offer significantly better and value and market leading rates, whilst still making money, and that incumbents wouldn’t be able to compete on that point. Yet, the incumbents are by and large, not only competing to that effect, but they’re beating the neobanks in terms of offering better value.
Not on current account interest mind, only Kroo are beating Starling, so this is good.
Starling obviously think long and hard before taking these types of decisions.
They’ve most likely built up considerable reserves and this modest uplift ain’t going to pose any risks for them.
As @WillPS says, nice surprise for existing customers. New customers may not flock…
There has never been a comment from anyone at Starling about offering better rates than the big banks because they have lower costs. They have only said they have a lower cost base the big banks can’t compete with.
Anne has previously very bluntly said if you want a savings account go somewhere else. She has also said they won’t have to offer interest rates because of the app.
I have to remind myself she is no longer CEO so maybe this is a different approach or more likely their hand has just been forced in some way.
Not enough for me to change how I bank and increase my Starling balance from £0.00, I’m afraid.
Nice bonus for the Starling core users though
I’m not sure I agree. The base rate is still 5.25%, so they’re still making 2% on deposits. However, it will encourage me to leave more money in my Starling account and I doubt I’ll be alone in thinking that. If you see a path of least resistance, you’ll likely find me walking it.
She was definitely using that line at the expos back in 2014/15/16, along with Blomfield and Mullen. They all were doing it. They were trying to convince folks in the industry of their approach. That not only could it work, but that it could win, be better both for bottom line and for customers.
I think they (neobanks) regularly went into those panels with more belief in them from the audience than they came out with though.
Anne may have later said those things about savings in communicating to customers through the media, but you must remember that until they butchered their current account interest rate, it rivalled (though didn’t quite always beat) the easy access savings rates offered by big banks. So it was a justified stance to have, because shunning that traditional offer helps to promote your approach of just paying a similar level of interest on all your balance held with the bank as better. And she wasn’t wrong about that, especially when it’s a rate that competes, and was at a time before instant access to easy savings was a proper competitive thing like it is now.
No interest at all if you hold £5,000 or over in your account is disappointing and likely to alienate many.
Who on earth keeps £5k in a current account
Maybe not in a current account but that £5000 is across the current account and spaces. Same setup in Chase gets you 4% on way more, albeit only 1% on the current account.
Aha. My Starling balance is £0.00, hence why I never bothered looking into it