FreeTrade 3% Savings Rate

Thoughts?

From FT announcement yesterday:

“We’re excited to announce the latest addition to your Plus membership. From today, you can earn 3% interest in uninvested cash. This new feature of Plus is a 3% interest rate on up to a maximum of £4,000 of cash holdings.”

Essentially makes their cost for Plus membership $0 if you have £4K sitting uninvested / in cash holdings.

Suddenly 1.25%, which was awesome, suddenly
doesn’t look so awesome anymore…

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You need to remember that the 4k balance is break even.

I think our break even point for a user(if they pay for AI), is about 1.6k, so with an extra 2.4k earning 1.16%, your earning more.

Sure thing but it now makes the business case to move funds to FT and take out FT Plus very compelling. Will be interesting to see how this impacts user / AUM growth. I can see this as an investor and through their investor community forum. Chip and FT both making excellent progress. Noice…

Or just use Trading212 instead.

Edit
On reading through, it is a bit like smoke and mirrors. Pay £10 a month for their ‘premium’ package, and as one of the perks, you can earn 3% on cash balances up to 4k, which is £120 interest. Another way to look at it, is hold 4k in cash with them earning nothing, and get the premium features for free.

Best to use Trading212 I think for your stocks and shares equivalent as it has similar features for no charge(the FX conversion cost would be 0.5% rather than 0.45%, and it has more markets), and use Chip for the 1.16% annually on balances up to 5k, or look elsewhere.

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1.16% - how this was calculated? Looking on the main page the current offer is just 0.3%. Am I missing something?

It’s 1.25% on Chip +1.
In addition, Freetrade specifically states the 3% on up to £4k is designed for funds awaiting investment via their app. How they will police it is anyone’s guess, but if abused wholesale, I expect they’ll shut it down.

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The bonus 1.25% is paid on balances every 12 weeks, and is not paid on any bonus paid IIRC.

Every 12 weeks you should get paid 0.2863%, but each time you get paid, you have an extra £2.86 for every £1000. Over a 52 week period that is £11.44 paid to you per £1000.

You are best of using the Chip +1 account, to take the bonus out.

Suddenly 1.25%, which was awesome, suddenly
doesn’t look so awesome anymore…

How so? You have to pay £120 a year to get £120 in interest. With Chip, you pay £18 to get £62.50 in interest.

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Thx for the explanation. To be honest I truly believed that I should expect that my money will earn £12.50 throughout the whole year (£1000*1,25%). Now I see that the effective APR is not 1.25% as advertised but it is 1.14%. In my opinion, if they decided to compare themselves with easy access accounts they should be using 1.14% and not 1.25%. As it is now is misleading at least.

Chip doesn’t compound. Is that what you are suggesting?

Take from T&C

The bonus is calculated on your balance every week. The bonus balance in your account is updated weekly. Bonuses accrued in a 12 week period will be available to withdraw at the end of that period only. If you close your account before the end of the 12 week period you will not receive the bonus accrued for that period.
Your bonus is not interest, it is not FSCS protected, bonus does not accrue on bonus i.e. it does not compound, bonus is only paid to you by Chip when you withdraw your full Chip+1 balance.

Yes I get that but you don’t earn bonus on bonus was just clarifying that

Alternatively you could invest with Freetrade and have a little fun instead.

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You need to charge your battery mate!