Digital bank Zopa has officially entered the current account market with the launch of its new offering, “Biscuit,” promising customers high interest rates and cashback rewards.
The move sees the online lender aiming to disrupt traditional banking by offering 2 per cent interest on current account balances and a linked savings account boasting a 7.10 per cent rate.
The “Biscuit” account provides a 2.00 per cent AER (annual equivalent rate) on balances held within the current account itself.
Beyond interest, customers can also benefit from a 2.00 per cent cashback on household bills, applicable to up to £1,500 of direct debits annually.
The account is linked to a regular saver option, allowing customers to earn a substantial 7.10 per cent interest on deposits of up to £300 per month.
After a 12-month period, this regular savings account transitions into an easy access savings account, currently offering a 3.50 per cent rate.
Zopa Bank has confirmed that customers will then have the flexibility to open another regular saver to continue benefiting from the higher rate.
Merve Ferrero, chief strategy officer at Zopa Bank, shared the strategic intent behind the new product, stating that “Biscuit aims to deliver great value across everyday spending and saving.”
A survey commissioned by Zopa indicated that nearly a quarter (24 per cent) of people chase cashback offers while nearly a fifth (19 per cent) have multiple bank accounts and financial products in a bid to find value, sidestep fees or to be rewarded for their loyalty.
A third (33 per cent) of people surveyed said they prefer the bulk of their bills and significant outgoings to leave their account on or close to payday, so they know how much money they have left to spend.
One in eight (12 per cent) people have some “no spend” days during the week and more than a third (37 per cent) use mobile banking to stay on top of their finances.
The research was carried out by OnePoll, among 2,000 people across Britain who are in employment, in June.
Rachel Springall, a finance expert at Moneyfactscompare.co.uk, said: “It is exciting to see another challenger bank launch a current account into the fray for consumers hoping to make their money work harder for them. Digital banks are offering some lucrative benefits and are a refreshing alternative to the major higher street banks.
“The perks of traditional current accounts do tend to vary depending on how a customer uses it.”
She said the Zopa account “may be suited to consumers who don’t want the hassle of opening a variety of accounts to cover different needs”.
Ms Springall said it is vital that customers work out how much they will fully earn from any account.
